June 2


Market Commentary for June 2, 2020


June 2, 2020

Tight New Range

We now have some excellent levels formed at 25,000 and 25,800 as shown in the 39 Minute Chart.  With current political and social factors, I would expect the market to remain within this range for a day or two, and then likely break to the upside.  However, we also see key support at 24,800.   While our posture has been bullish for several weeks, any break of this level must be met with extreme caution, as market participants will likely react to the apparant weakness with profit-taking.

DJIA – 39 Minutes

(repeated from yesterday)  The broad consolidation in the Daily chart implies a move to 29,500, which is 2x the distance to the center.  This is how consolidations typically work, but sometimes consolidations form exhaustions and break in the opposite direction.  Since this one has broken to the upside through 24,800 we must assume it is a continuation move and will head higher. 

DJIA – Daily

The range that has formed, above support, is bullish.  However, this is still a very mixed market with opportunities on both Long and Short sides. I expect the general market to move sideways over the next several days.  After that, it should move higher based on the technical pattern we see in the Daily Chart.  But this is a new ball game.  We have never seen anything like this in the history of the U.S. stock market, where participants completely disregard trillions in new federal debt, bankruptcies and depression-level unemployment.  So we have to be ready for the “bad hair day”.  Watch 24,800 down, as a break of that level will mean a strong sell-off is likely.  Otherwise, accumulate sympathy stocks or those that have lagged the general recovery.

Ed Downs

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