Mish’s Daily: Classic Hump Day Trading After Mixed CPI

1 month ago 186 views 4 min read

Michele “Mish” Schneider

Director of Trading and Education

MarketGauge.com

Mish’s Daily: Classic Hump Day Trading After Mixed CPI

Written by Michele ‘Mish’ Schneider

Looking at the daily S&P 500 chart, we can see we are sitting on the hump this fine Wednesday.

By the hump I mean that given the negative sentiment to start the day, SPY rallied and closed just above the 50-day moving average and with a possible return to a bullish phase.

Now that is SPY.

What will help get us over the hump is if it confirms with a second close tomorrow over the 50-DMA.

Note that the Leadership on the SPY chart is comparing its performance to the long bonds TLT.

Here is another area of concern. SPY is underperforming TLT which is typically risk off.

However, junk bonds continue to hold their leadership which suggests that the 2 risk factors of SPY: TLT and TLT: HYG cancel each other out.

And what would help even more is if the transportation IYT sector continues to hold its 50-DMA.

On the Daily chart of IYT, this too reversed from the morning sell-off to clear the 50-DMA.

While IYT now slightly underperforms SPY, momentum continues to look weaker with the bearish divergence.

Bottom line is that this perfectly defines what a hump day is all about.

To get over the hump for the bulls we need another day of gains in both the S&P 500 and in the Transportation sector.

And should we not confirm the positive phase changes on Thursday, then we can say the hump was a bit too unstable for bulls to hang on.

Educational purposes only, not official trading advice.

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