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Friday, May 23, 2014

Daily update 5/23

Record close on SPX.  Here is the daily chart.


Today was the lightest volume day of the year.  Did all the sellers take off early for the long weekend?  Lets look at the new high situation.  At the March peak SPX had 72 new highs.  At the April peak there 64.  The early May peak saw 47.  Today there were 23.  That is the very definition of a market that is thinning out.  Did you know that 47% of SPX stocks are now down 7% or more from the high?  No sign of conviction on this retest of the high at all.  They talked about that on TV at the close.  One trader interviewed said he was selling.  They asked him what happens if the market keeps going up another 6-10%.  He said he would have a bunch of cash to do something with and that his family and friends would be mad at him.  He obviously has enough conviction that the market is going down to warn his family and friends.  That takes a lot of guts to say that on TV.  Lets have a look at the futures chart.


This rally has the exact same shape as the last one.  Kind of odd.  We will find out next week if it rolls over again.

The last week of May has been down the last four years in a row.  Will the pattern repeat or now that I mentioned it on the blog will it do something different?

With SPX now making four tops it is do or die time.  If this rally fails to stick I think the selling pressure will pick up.  Each peak got weaker in the number of new highs.  I still think it is going to take a buying spree to go higher.  It is one thing to make a new marginal high like we have done the last few months.  It is quite another to have a big push up.  I would say a close back below 1880 would be very bearish from this chart pattern.  What happens might very well depend on what IWM does.  Lets look at the daily chart.


IWM poked its head above the 200 SMA and the upper trend channel line today.  Is it going to break out of the channel or turn back down into it?

To me it looks like SPX is standing one toe.  In the 15 years I have been studying the market the only time the new highs got this low for this long while SPX was at the highs were in 2000 and 2007.  Is it different this time?

The market and sector status pages have been updated.  Have a great long weekend.

 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.