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Tuesday, February 17, 2015

Daily update 2/17

A little more up.  Today looked like that slow creep pattern may be starting up again.  Here is a look at SPX.

SPX closed right at 2100 thanks to a last minute buying spree.  Despite the up day the breadth was negative all day and ended at -55%.  New highs were down from Friday's 203 at 151.  New lows remained low at 13.  This break out to new highs is still in the very weak category.  Will the buyers show up to chase price or run out of steam completely?  We remain overbought short term.  Is that a limiting factor?  Lets see what the futures chart has to show us.

The futures looked like a jamb job in the last few minutes to get SPX back up to 2100 for the close.  It was there earlier in the day, but sold off in the afternoon.  The -DI line is down in the 11 range where the market often struggles to go up.  Price is obviously well extended from the 50 SMA. Buyers might be a little shy.

I have seen a number of articles talking about how bullish the new high in SPX is.  One came from a guy who was not interested in U.S. stocks last year at all.  All of a sudden he is getting rather gung ho.  A contrarian indication?  I mentioned the other day I searched and could not find any recent articles on a top for IWM.  There seems to be broad acceptance the market is going higher.  I have seen no mention that financials and transports are both lagging.  The Dow has not made a new high yet either.  Market internals are showing some strength, but are not rip roaring by any means.  New highs are lower then they were earlier in the year.  So far this move up looks pretty feeble.  If the bulls don't come in with some real strength and push price higher with some vigor this retest of the Dec. high will fail.  The financials and the transports need to catch fire as well.

There was quite a bit of talk about Greece today.  It seems that investors mostly believe there will be some deal at the last minute.  Why wouldn't they believe that.  They have been conditioned over the last few years to believe it will happen.  Maybe that will be the case, but there is definitely risk this time.  The Greek gov. has made it quite clear they want debt forgiveness.  Germany has made it clear they won't accept that.  Near as I can tell almost everybody expects Greece to cave in.  However, the new gov. was elected to change things.  They have been going along with what they were told to do since 2010 and the country is a disaster.  I believe the new gov. recognizes that nothing is going to change without debt forgiveness.   I think they are correct on that.  I suspect they will dig their heels in much harder then ever before.  Italy, Spain, and Portugal are waiting in the wings if Greece gets debt forgiveness.  That makes it rather hard for Germany and the ECB to do it.  This isn't necessarily just going to be resolved easily.  I guess we will see what happens.  Just beware there could be some volatility if things don't go smoothly.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.