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2 Important And Positive Developments For The Bulls (Technically Speaking For 6/3)

Jun. 03, 2020 6:30 PM ETSPY, IWM, QQQ, IEF5 Comments
Hale Stewart profile picture
Hale Stewart


  • Oil continues to make a rebound.
  • The ISM Service Index is finally showing lockdown effects.
  • There were two key developments in the markets.

Oil continues to make a comeback:Prices hit a low in late April when they briefly went negative. The chart then formed a double bottom in the latter half of April. Prices gapped higher at the beginning of May and have continued to rally. Currently, there are two key price levels (tagged by the two horizontal lines), both in the mid to upper-30s. Prices are above the shorter EMAs, which will continue to pull them higher. It's possible to think of this chart as an imperfect, reverse head-and-shoulders formation.

The latest ISM Service Index shows a coronavirus drop (emphasis added):

The NMI® registered 41.8 percent, 10.7 percentage points lower than the March reading of 52.5 percent. This reading represents contraction in the non-manufacturing sector and is the NMI®’s lowest since March 2009 (40.1 percent). The Business Activity Index fell 22 percentage points from March’s figure, registering 26 percent — the lowest reading for that index since the debut of the Non-Manufacturing ISM® Report On Business® in 1997. The New Orders Index registered 32.9 percent, 20 percentage points below the reading of 52.9 percent in March. The Employment Index decreased to 30 percent, 17 percentage points below the March reading of 47 percent.

The companion manufacturing index has already started to improve (although it is still showing a sharp contraction). Since the US is opening up, the service index will hopefully start to rebound in the next few months.

Markit Economics released the latest service index numbers today. Here are some highlights:

Country April May
Japan 21.5 26.5


44.5 55
Germany 16.2 32.6
Spain 7.1 27.9
Italy 10.8 28.9
France 10.2 31.1

China's reading moved from contraction to expansion, largely due to an increase in domestic demand. All other countries reported drops in production, new orders, and exports. The rebound in the

This article was written by

Hale Stewart profile picture
Hale Stewart spent 5 years as a bond broker in the late 1990s before returning to law school in the early 2000s. He is currently a tax lawyer in Houston, Texas. He has an LLM in domestic and international taxation (MagnaCumLaude). He is the author of the book The Lifetime Income Security Solution. Follow me on Twitter at @originalbonddadYou can read his legal analysis on his law office's blog.

Analyst’s Disclosure: I/we have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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