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The call for this week
By: Jeffrey Saut | February 20, 2018

We find it very interesting that the decline, and subsequent bottoming sequence, laid out in these reports has played so well. Moreover, the anticipated “selling climax” was foretold by two 90% Downside Days (90% of the total points, and total volume traded, came in on the downside). Then the rebound was accompanied by two 80% Upside Days. We also find it interesting that the decline stopped on the long-term uptrend line and the 200-DMA (Chart 5 on page 5). Ladies and gentlemen, all of this is suggestive that, barring a news surprise, a meaningful low has been seen. That said, the stock market’s internal energy is totally used up on a trading basis, and the 20-DMA capped this first upward thrust and should prove a stumbling block near term. Indeed, the SPX is now trapped between its 50-DMA (~2725) and the 20-DMA (~2751), as the 20-DMA we spoke of on Friday did stop the upside momentum. Usually such a moving average squeeze generates a decent move when a breakout occurs. We think the anticipated pause, or attempt to sell stocks off at the 20-DMA, will resolve itself to the upside. This morning, however, stocks are weaker across the board given the political news.

https://www.raymondjames.com/wealth-management/market-commentary-and-insights/investment-strategy

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