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Wednesday, July 23, 2014

Daily update 7/23

What a snoozefest of a day.  Here is the daily SPX chart.

Another increase in volume today.  That suggests more selling into strength.  So far this does not really look like the beginning of new leg up.  I think people have been waiting to see if earnings were good enough to justify higher prices.  So far the jury is still out.  We have had a pretty good sampling across industries by now.  Since SPX closed only 2 points higher then it was on 7/3 before earnings we know there has not been much buying interest from earnings.  It seems like we should have had that by now.  That makes me suspicious the jury might come back that prices are too high.  Lets have a look at the futures chart.

The uptrend line continues to rise with the futures not getting much altitude above it.  This is a possible rare W top forming.  Maybe it is my imagination, but it sure looks like the market is really struggling to go up here.  The most interesting thing that happened today was the SOX.  Here is the daily chart.

This index was down 2.3% today.  QCOM had earnings after the close and it is down 4% as I write this.  The SOX has been the best performing U.S. index this year.  This is a volatile sector and does not have the same leadership role it had in the 90s.  However, it still a fairly big weighting and is economically sensitive.  With IWM and RTH already lagging another important sector falling behind would not be particularly good for the market.  Maybe this is a one day aberration, but the chart looks questionable.  I have no idea why the big sell off.  They were so busy on TV crooning over SPX making a new high by 2 points they did not seem to have time to cover why the SOX was down big.  Lets see what shakes out with this one.

Plenty of technical divergences abound, but so far SPX is holding up.  Will it be able to maintain the status quo?  The last two days look like possible distribution and market internals still look pretty fragile.  I think the bulls need to step it up to keep this rally going.

Here is an article on more trouble in China Chinese Home Prices Decline In Record Number Of Cities, Average Sale Price Has Biggest Drop Since Lehman.  Falling home prices is really what got the U.S. subprime problem going.


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