The market has been very bullish to say the least. Yesterday was one of the worst retail sales #'s posted since the Great Recession and all it took was Larry Kudlow to get on the TV and say it was probably just a glitch to get the S&P back on track. Today more China trade deal headlines and exploding higher. This time though we are around that 200 day moving average point again where previously rallies during 2018 stayed above (only 2 to 4 days) then stalled.Today will be the 4th day above the 200 day. Should the market maintain above here it could give the bulls even more confidence to buy (next good resistance is probably 2800 to 2820). A good rule of thumb for investors has been to stay long while the market is above the 200 day and stay out of the market when it is below it. I added to shorts yesterday and it does not feel too smart at the moment. I was calling this rally a dead cat bounce previously. That will still be true if we lose momentum here, otherwise the bull may be back on. From a fundamental perspective we are getting some late-cycle signals that are warnings. Housing - autos - heavy truck sales - slowing. Job #'s as good as it gets, etc. ECRI’s U.S. Weekly Leading Index (WLI) slipped to 143.6 as its growth rate ticked down to -4.3% and is now lower than any time since 2011 or so. So from a long term investment point of view one should be wary. From a trading perspective I believe the prospects of a China deal is keeping the market bull alive. Most likely we get a short lived pop with an actual deal then a sell-off. But keeping a close eye on the 200 day. If we stay above the line a few more days I would probably start taking some shorts off.
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