There’s a lot of cautious trading after the retail report on October 16, 2019, that showed retail sales fell in September by -0.3%.

The SPY chart also shows a Rising Wedge break.

SPY chart in the 4-hour time frame shows what could be a rising wedge break.

The predicted price on the Rising Wedge break is $290.54 and seen in the red shaded area on the chart above.

Upward momentum has been waning for the last 5 trading days on the 4-hour chart as shown above.

SPY chart in the 30-minute time frame.

As long as SPY in the 30-minute time frame can hold its uptrend line and stay above $297.83, I wouldn’t expect an imminent market pullback quite yet.

Investors are watching for signs that the China trade “deal” will fall apart.

Investors are also watching for signs that the positive reaction to bank earnings will become a larger market theme. The bearish narrative has been that earnings and guidance are going to confirm the fact that the economy is weakening and may even be headed for a recession. Banks totally debunked that narrative yesterday but it will be technology and other sectors that will better tell the story.

Earnings tonight from Netflix (NFLX) and IBM (IBM) will intensify the conversation about how bad the economic slowdown is. I think a lot of traders are choosing to stay on the sidelines and in the safety of cash until we move further through earnings season and have a better idea of the state of the economy.

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