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Thursday, August 28, 2014

Daily update 8/28

A couple of weeks back some headlines came out about Ukraine attacking Russian military inside Ukraine territory that caused a sell off in the market.  Today NATO came out with a report and sat photos showing Russian military inside Ukraine and the market did not even notice.  I wonder if volume is so light they turned off the headline scanning computers. Wall Street truly is on vacation.  Here is the daily SPX chart.

The market gapped down a bit this morning on weakness in Europe and SPX tested the key 1991 level.  Buyers stepped in and pushed the market up a bit.  However, we still closed down a few points.  Volume was even lighter today then yesterday.  This action validates 1991 as an important level.  Do we test it again or make new highs now?  Lets see what the futures chart looks like.

The futures tested the 18 SMA today and bounced.  There was a bit of strength late in the day that carried on after the 4 PM close.  That turned the price bar green.  That could mean the consolidation phase is over, but not necessarily.  We really need to see a thrust bar and strong close at new highs to indicate rally chasers are alive and well.  The 2000 level could be stiff enough resistance to end up causing another pullback.  So far we have seen very little buying interest up there.  The power is up for grabs here.  Which side reaches out and takes it?

The night before the last trading day in July I said "Tomorrow being month end is sometimes a muted day, but who knows."  The who knows part was correct as we ended up with a rather large down day.  I have no idea what happens tomorrow.  Maybe nothing.  The Russian thing may heat up or cool down overnight.  Europe was down today right from the start and I don't really know why.  The NATO announcement I saw came out after Europe closed.  Those markets might have a negative reaction tomorrow which could influence our open.  We have a three day weekend coming up also.  If people get nervous over Russia there could be some extra selling.  However, of late nothing seems to bother the market so maybe this is just another instance of who cares.  Too complicated to guess at.

Along with 1991 there may be another key level at 1986.  Check out the latest NAAIM survey.

There was a big surge in bullishness from 56 to 78 in the last week.  The survey is based on the Wed. close.  Last Wed. SPX closed at 1986 so the buying spree started around that level.  SPX only moved up 14 points and the volume was low so I am guessing that most of the buying was in index and ETF positions and not so much in individual stocks.  That tends to happen when the money managers are afraid of being left behind, but confidence is too low to pile into individual stocks.  If SPX drops below 1986 it is likely to put a lot of those new positions underwater which could increase selling pressure.


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