On Friday, the company media speaking heads have been blaming the sudden industry decline on the inverted yield curve. Am I the only cynic who suspects that advance warning of the Mueller report’s release leaked out to some large traders and triggered some promoting that led to an avalanche of automated algorithmic promoting? If the sell off was brought on by fears of the Mueller report’s release right after the close at five PM Friday, then the substantial Friday sell off will possibly not lead to a continuation on Monday. If the sell off continues this week, it could, in reality, signal the existence of other issues. China trade talks everyone?
Meanwhile, the GMI remains at six (of six) and even my GMI2 indicators have not weakened a great deal. I lightened up on Friday and will appear for some entries if the industry rebounds. Most troubling to me is that for QQQ and SPY the 30 week typical (red line in weekly chart under) is nonetheless declining. This is a main sign of weakness for me, as it could indicate a Stage four decline. In prior substantial down-trends I would wait for the 30 week typical to curve up prior to tiptoeing back into the industry. On the other hand, the industry was extended early final week and the Friday decline may well have merely reflected that? Let’s see if the QQQ finds assistance back at the four week typical (red dotted line on this weekly chart, about 175.62). The horizontal pink line could also be a location for assistance to come in. A close back under the 30 week typical could be ominous for the longs.