SPX tested 1880 all day and found nobody willing to push prices higher. Despite nearly all indexes being up today the breadth was only 58% positive. On the 4/22 thrust day we had 71% positive. This was not a particularly strong day. It was also clear we still have resistance here. Enough companies have reported that if we were going to break out I think we would have by now. Lets zoom in to the SPY 60 minute chart.
We had yet another gap up today. However, this being Tuesday it did not sell off. SPY got above the 50 SMA first thing and stayed there all day. However, it never got a confirming close. If the market is going to continue on in the direction of the MA break you usually get that confirmation in the next couple of bars. Since that did not happen I think the odds favor this reversing back down. An hourly close below that 50 SMA should put the bears back in control.
There is a slight, but perceptible VIX divergence between now and the 4/22 high. That combined with the weaker internals today might also give the bears an edge. Tomorrow is FED day and even though they will likely taper another $10 billion as everybody expects there could be some market volatility.
SPX closed very close to where it was on 4/22. However, some important divergences seem to be developing. We all know that IWM and QQQ have been showing a lot of relative weakness. Between 4/22 and now we can add IYT, XLF, and SMH to that category. These are important ETFs for market health. I still cannot see a real all clear level here on the long side. The market looks like it is getting weaker to me.
Bob
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