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Friday, July 5, 2013

Daily update 7/5

SPX conquered its 50 DMA and the big gap down from 6/20.  Here is the daily SPX chart.


The trend indicator turned up again Wednesday and was confirmed today.  I don't think it is safe to say the market is totally out of the woods yet, but up is up as they say.  Volume was extremely light and breadth was only 55% positive.  That breadth reading is extremely odd for the size of the move up today.  That was heavily influenced by a lot of bond funds that were down along with interest rate sensitive stocks.  We had a surge in new lows to 80.  Down moves are seeing very high negative tick readings while up moves are seeing low positive readings.  This suggests that some people are selling a lot of individual stocks.  I believe the majority of the buying is futures based.  That kind of move shows a lack of conviction and can be pretty fickle.  It can grow legs suddenly without warning as conviction level rises or it can roll over and tank. 

Earnings season starts next week.  Does anybody care about fundamentals anymore?   Sometimes it increases day to day volatility as the market digests the news.  If there was ever a set up for that to happen this is it.  We have been seeing big gaps in both directions lately.  That could easily continue through earnings season. 

As long as SPX stays above the 50 DMA the bulls have the edge.  If the bears do not reverse it on Monday then the bulls should be in control for now.  Bonds got creamed today.  Was that the source of funds for stocks?  Will that continue or will bonds stabilize?  If bonds keep going down will higher rates eventually matter to stocks?  I wish I knew.

Chart practice has been update with GRMN the stock today.
http://traderbob58-chart-practice.blogspot.com/

The market and sector status pages have been updated.

Have a great weekend all.

Bob

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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.