June 3


Market Commentary for June 3, 2020


June 3, 2020

Top of Range

Tuesday we travelled to the top of the range we marked, ending right at Resistance of 25,800.  The question today is “Break or Bounce?”  I would expect a pull-back and further consolidation in that range, but if it powers through 25,800 will be new Support.  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 apparent weakness with profit-taking.

DJIA – 39 Minutes

Once again, the broad consolidation in the Daily chart implies a move to 29,500, which is 2x the distance to the center.  Sometimes consolidations form exhaustions and break in the opposite direction.  Short term support is 25,000, and long term is 24,800.  That’s 1,000 points from current levels and would indicate significant weakness if it is broken this week. 

DJIA – Daily

This is still a very mixed market with opportunities on both Long and Short sides. Even though we are pushing up against highs for this time frame, I expect the general market to move sideways over the next several days.  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 severe weakness entering the market.  That’s not the same as “pull-backs”.  I’m talking about severe down day breaking 25,000.   Otherwise, accumulate sympathy stocks or those that have lagged the general recovery.

Ed Downs

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