Heading into June Stocks Show Remarkable Staying Power. Keep an Eye on the Dip Buyers.

Plus, a New Momentum Trade on the verge of a major breakout.

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Stocks got off to a wobbly start this morning as news of a “stalling” in the U.S.-China trade talks hit the wires. And while that’s not good news, the selloff in the futures was quite moderate and prices have stabilized as the trading session has progressed. This suggests that the market is steadily adjusting to the ebb and flow of news on the trade front and that they are focusing on the improving liquidity and the Fed’s next move on rates now that inflation, based on the Fed’s favorite indicator, the PCE is showing a marked improvement.

Stay focused on each individual position and keep an eye on the dip buyers. They’re out there nibbling at things.

Market Update

The New York Stock Exchange Advance Decline line (NYAD) remains rangebound dancing above and below its 20-day moving average while remaining within striking distance of a new high.

The S&P 500 (SPX) is trading above its 20-day moving average and the 5850-6000 resistance band which holds the key to the next trend. As long as SPX holds above the 20-day moving average, the uptrend remains intact. A move above 6000 will likely trigger mechanical trading (algo) buy stops and move stock prices higher.

The U.S. Ten Year Note yield (TNX), is once again below 4.5%, as the PCE came in cooler than expected.

Bitcoin (BTC) has rolled over and is trading below its 20-day moving average as the ADI, OBV, and RSI indicators turned down suggesting a short term and perhaps an intermediate term loss of momentum. We may see a test of $100,000.

Bottom Line

The headlines aren’t going away. But the market is adjusting. Thus, the key to success is to keep an eye on the big picture as long as the market’s breadth and the major indexes don’t break below key support. So, monitor the news, the market’s response to the news, and whether the dip buyers appear.

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