by Steven Sarnoff
This morning, we are seeing support for stocks being tested. As the Trump reflation trade loses air, will shaky support give way? In my opinion, it will.
Following the election, the market was juiced on big bets that Trumponomic policies would boost US growth and inflation, hurting T-bond prices (lifting bond yields). Well, what have we seen? In the wake of Yellen and crew’s action on interest rates, GOP failure to reach a consensus and the abrupt end to health care legislation, and Mr. Trump’s rocky Beltway honeymoon, bond prices have been rising (yields falling).
The outlook continues to dim for the President’s political agenda and promise of a business boom to get smooth passage through the halls of the Capitol. But what does market price action say? Last Tuesday’s sharp and decisive decline, depicted by a long black candle line, showed sellers gaining the advantage. Bulls may be circling the wagons, but emboldened sellers are chipping away at support (demand). In my opinion, precarious support is likely to give way over the weeks ahead.
Support is at $130-$132 and $124-$127. Resistance is at $135-$136.24 and $138-$141.
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