The binary nature of those worrisome trade headlines are rattling markets, but investors shouldn’t lose sight of the positive longer-term technical backdrop.
The most recent sell-off in the equity market is understandably anxiety-provoking. Afterall, who would want to own economically sensitive stocks when the risk of stray Presidential tweet or headline could send stocks careening lower at any point. These are valid concerns exactly why it makes sense to review the technical backdrop.
Technically speaking, I’d encourage investors to stay focused on the likelihood that the S&P 500 Index is simply digesting the Q1 surge that pushed weekly indicators into overbought territory. My view remains unchanged, that is, the S&P 500 should trade in relatively narrow range above support near the S&P’s 200-day moving average (2775) and Q4 2018 highs (2800), very similar to what developed through Q2 2018.
Applied Materials (AMAT)
More specifically, a stock like Applied Materials (AMAT), a maker of semi-conductor equipment, remains in a bullish trend, with this week’s positive reaction to first quarter earnings report giving rise to positive technical action.Uptrends almost always develop in a stair-step way to create higher highs and higher lows. As one...