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Thursday, April 3, 2014

Daily updatre 4/3

They got all excited this morning as the Dow made a new all time high.  However, the selling started immediately.  A late day rally got the Dow back above the prior high close, but it faded a bit going into the close.  It was comical to watch CNBC get excited about 3 Dow points, LOL.  Here is the daily SPX chart.

SPX closed back under the trend line with a hanging man candle.  I guess we will find out if that matters or not.  It was also an outside day.  The yellow arrows mark the other outside days we have had this year.  None of them have been bullish.  Lets have a look at the 60 minute SSO chart.

There was quite a bit of volume on the late day reversal bar.  I looked at the 15 minute chart and more of that volume was on the down side then the upside.  It is not quite as bullish as it looks.  SSO ended the day perched on the 18 SMA.  Does it spring off of it tomorrow or break down?  From this position a break down could lead to a failed break out in SPX and a pick up in selling.

Even though SPX was only down a smidgen the QQQ (-.65%) and IWM (-.88%) were much weaker.  They were showing relative weakness back in March and that continued today.  The moving of money from speculative high beta stocks to low beta continues.  The market is becoming more and more defensive.  This is the first time we have seen this behavior this entire bull market.  Money managers that must stay invested are clearly seeking safety for their money.  Are they wrong?

SPX bounced off the key 1883 level late in the day, but left a somewhat bearish looking candle.  If that level fails to hold tomorrow the next key level down is 1878.  After that we have the 18 DMA at 1865.  I would also expect there are a bunch of stops somewhere below 1850.  Should we break that level any time we should get an acceleration down.  This market is not safe for bulls until both IWM and QQQ make new highs.  The relative weakness of former market leaders (also includes biotech IBB which is actually in worse shape) is a big huge caution flag.  Be careful.


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