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Thursday, September 4, 2014

Daily update 9/4

Key reversal day in SPX.  The COMPX had one yesterday I missed noting in the update last night.  IWM followed through on its bearish engulfing bar from yesterday.  Here is the SPX daily chart.

Volume increased again.  This is the third day in a row that breadth started out positive in the morning as the market probed new highs.  Each day we ended lower and on negative breadth.  Each day the breadth got more negative.  That is clearly three distribution days in a row at all time highs.  That is a very rare occurrence.  Off the top of my head I can't remember seeing more then two days in a row like that.  New highs dropped down to 159.  The bears are close to getting control I think.  Lets take a look at the futures chart.

Once again we got a green (actually blue, but same thing) price bar with no follow through.  There was a late day bounce and some more upside after the 4 PM close that got the futures back on top of the 18 SMA.  The dip buyers are doing just enough to hold the market up.  Lets see what the breadth chart has to say.

The McClellan oscillator went negative today.  That is pretty rare with price making a new high.  The 10 DMA lines are getting very close to a cross also.  It is clear how the breadth has waned the last 9 trading days.  I mentioned back in July how low the peak in the 10 DMA volume line was (3rd panel down).  The current rally has an even lower peak.  These last two peaks are by far the lowest peaks of any rallies in this bull market.  Buying interest appears to have waned considerably.  At the late July peak I commented that the market was in the weakest technical condition of any prior high in this bull market.  It looks even weaker to me this time. 

We clearly have actual sellers above 2000.  It is not just a lack of buyers this time.  The ECB lowered rates and announced an asset buying program.  It seems to me everybody got what they wanted, but they sold it anyway.  Will they change their mind tomorrow and buy it?  We have the much watched employment report in the morning.  That could cause some volatility. 

We have a series of bearish looking bars, but price has not taken out the key 1991 level yet.  Until that happens the bulls could still win this battle.  However, I think they are running out of time and better make their move pretty quick.  I guess we will see if they show up again tomorrow.  It has not been for a lack of trying really.  They just keep getting beat back by sellers.

I have to adjust the short term trends to neutral across the board tonight.  We have not made any upward progress in more then 5 days now.


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