It was only a few days ago, more precisely on May 14th, we asked ourselves if this could be a bear trap setting up. If you read the Twitter finance sphere, you could easily have thought the world was coming to an end.
The problem with the bear argument, is the fact it is driven by emotional factors, and bears seem to see the possible move lower always more of a crash than a trend lower. This might be a topping out process, but markets seldomly crash just because everyone is Tweeting about it.
Anyway, below are a few follow up charts on our bounce set up logic outlined a few days ago. The huge 2800 level held as support in the SPX. Next is the 50 day average resistance at 2870, and if that is taken out look for the 2900 resistance.
NASDAQ futures turned violently higher as well, and we have the NASDAQ futures trading above the 50 day average here.
Germany’s DAX index is a huge China proxy. We wrote:
“Mighty DAX caught the Chinese flu, but this index loves bouncing on the 50-day moving average. Note the moves higher have actually been more violent than the sell offs so far in 2019.”
The bounces continue and they are actually rather violent to the upside. Should this continue higher, the guys waiting to buy at bargain prices are most probably going to be chasing indices higher.
Source, Charts by Bloomberg
