May 29


Market Commentary for May 29, 2020


May 29, 2020

Watching Support at 24,800

Pull-backs are expected, which is what we saw in Thursday’s market.  Key support is now 24,800.  It’s important to look for stocks that are showing the most weakness as the market gives up gains and/or consolidates as possible day-trading Short candidates, as well as those that are powering through to higher ground. Other commentary in ChartTalks discusses these candidates.

DJIA – 39 Minutes

Now that we’ve seen a solid break of 24,800 – the market should follow through.  The broad consolidation in the Daily chart implies a move to 29,500.  That seems difficult to achieve but this is how consolidations typically work – the market rallies, rests, and then continues – but not always.  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

Clearly, 24,800 is clearly the new Key Support Level.  As long as we remain above it,  continued accumulation is in order on those stocks that have lagged the general market.  From here, continued movement up has to do with how the market perceives risk in the short to medium term.

There can be huge profits trading in the direction of strength.  I have talked about all the positive forces – Fed Stimulus, End of Lock-Down, and tech stocks leading the way – especially those that benefit from a remote-work environment.  But we also have 40 million Americans out of work and bankruptcies everywhere.  It is quite possible that a few companies will win out, leaving the rest to catch up after things get back to normal.  The mixed market will likely lead to sideways movement over the next month.  But clearly, the market wants to go up.  Watch 24,800 down.  Otherwise, accumulate sympathy stocks or those that have lagged the general recovery.

Ed Downs

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