The Little Red Book of Rumors and Excuses

News this morning that China may be considering cutting back its buying of U.S. Treasuries not only sent TLT lower yet (even after its recent bout of weakness), but also seemingly sent U.S. stock index futures tumbling pre-market. Despite Warren Buffett opining that valuations were not too rich for equities relative to rates, we still have some weakness on our hands this morning. 

Just as we noted for Members yesterday that the index strength was masking some weakness and uneven action below the surface, this morning the index weakness perhaps is a bit exaggerated, especially considering we seem to have pockets of speculative fervor intact such as with KDAK and SSC. 

More than anything else, we want to remember that the China-selling-Treasuries news has been around for years, a background threat which was constantly shaken off by markets across the board. Ultimately, markets go where they want to go, though China dumping most of its holdings could speed up that process. 

But the larger issue for us today is that markets were almost assuredly looking for an excuse, rather than a catalyst, for some profit-taking in the "FANG" names, for example. In essence, this is the first test of dip-buyers' mettle in 2018. 

Case in point: The SPY hourly chart, below, shows is the steep momentum we saw since the new year slowed down.

But is the uptrend over?

Typically, buyers will put up at least a few fights before throwing in the towel, since they have enjoyed so much success buying any slight hiccup, heretofore. Indeed, $273 on SPY would seem to be the first level off of which to key today, as buyers are attempting to convert that into support as we speak.