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Tuesday, March 31, 2015

Daily update 3/31

As expected getting three up days in a row was too much to ask for. 

The bears did not get all of yesterday's gains, but they took quite a bit.  The Dow was down enough today to make it negative for the first quarter.  The transports have been relatively weak since last year and are also down for the quarter.  SPX had a miniscule gain for the quarter of 9 points.  That is what happens when you change direction every few days.  It looks like SPX may have got rejected at the 18 and 50 SMAs.  Downside follow through tomorrow would confirm that action.  If this bounce is over it would be the smallest bounce yet off the 100 DMA buy signal. 

The bulls came out to buy the gap down after yesterday's strength.  However, after nearly filling the gap the sellers showed up and took over.  The futures are now back below all the key moving averages except the 200 SMA.  I would say the bulls need to show up in force tomorrow or we are going to end up breaking the last swing low.  That event would likely send SPX down to its 200 DMA.

Last year SPX made a new all time high the first few days of April before a sharp sell off started on 4/4.  There has been a pattern in recent years of selling in the two weeks leading up to tax day. 

This was the first March we did not make a new bull market high since 2011.  That was the only other March in this bull market not to make a new high.  We know what happened later that year.  Also remember that prior times when Dec. and Jan. were both negative stocks could be bought later in the year at significantly lower prices.  The 1983-84 occurrence was the only time that pattern did not occur in a full fledged bear market.  Also remember the transports did not confirm the new high this year in the Dow.  So we have several warning signs that indicate there could be quite a bit more weakness this year.  It would not be surprising if we were entering a full fledged bear market.  Its just too early to tell yet.  However, caution is definitely warranted.


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