The indices wrapped up another losing week with a low-volume, oversold bounce into a three-day weekend. The S&P 500 and Nasdaq have been down three weeks in a row, while the Dow Jones Industrial Average has a five-week losing streak going.
The action this week was choppy and inconsistent, with a sharp selloff Thursday the most notable action. Movement is primarily due to various headlines dealing with the U.S.-China trade war, but there are additional concerns bubbling about a slowing economy.
The biggest positive this week was that the S&P 500 did not break below the prior week's low around 2800. That is the key technical level, and if it is tested for a third time, the odds that it will fall have increased. Meanwhile, there is a trading range now which extends to just under 2900.
While the bears have been unsuccessful so far in breaking support, the bulls have been equally lackluster in generating upside momentum. There is very little leadership and some very weak sectors such as banks, retail and oil.
The bulls remain hopeful that something positive will develop on trade and trap the bears, but there are few signs that progress will be made any time soon.
When we consider negative seasonality along with economic worries, the bears have a good argument, but they have consistently been unable to grab the momentum and do real technical damage.
The indices are in a weak position, and the individual stock picking is very poor, but so far support is holding and there is always the potential for a new surprise to spike the market.I'm still holding very high levels of cash and will stay patient until conditions improve.
Have a great Memorial Day holiday. I'll see you on Tuesday.