Wednesday, November 13, 2019

A correction in price, or time?

Mid-week market update: What to make of today's market? It is obviously overbought. The 14-day RSI is skirting the 70 level, which defines an overbought condition and that has been the reading at which past advances have temporarily stalled. Arguably, the 5-day RSI is flashing a series of "good overbought" conditions indicating strong price momentum, though it did signal a minor bearish divergence.

Neither Trump's speech yesterday nor Powell's testimony today revealed much new information to move the stock market. However, the market did hit a minor air pocket today over a WSJ report that the trade talks hit a snag over agricultural purchases, but the weakness has been only a blip and can hardly be described as catastrophic.
Trade talks between the U.S. and China have hit a snag over farm purchases, according to people familiar with the matter, creating another obstacle as Beijing and Washington try to lock down the limited trade deal President Trump outlined last month.

Mr. Trump has said China has agreed to buy up to $50 billion in U.S. soybeans, pork and other agricultural products annually. But China is leery of putting a numerical commitment in the text of a potential agreement, according to the people.

Beijing wants to avoid cutting a deal that looks one-sided in Washington’s favor, some of the people said, and also wants to have a way out should trade tensions escalate again.

“We can always stop the purchases if things get worse again,” said one Chinese official.
Traders will have to rely on technical analysis to read the tea leaves. Overbought conditions can generally be resolved in two ways, either a correction in price, or time. What's the most likely outcome?

The full post can be found here.

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