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Friday, April 10, 2015

Daily update 4/10 Wholesale data continues to be poor

The bulls showed up to play today, but not exactly in force.

SPX climbed higher out of the chute.  The breadth was only +52%.  New highs dropped from yesterday down to 128.  This looked more like a slow creep up kind of day rather then break out players jumping in.  I don't know if there is enough oomph to get over the March high or not. We have been sideways for months so it is not like the market is overbought here on any longer time frame.

It took a lot of work to get this bounce going and it has been lethargic the entire way.  After years of seeing panic buying every time the market hinted at going up this is a change.  It was not until well into new high ground before the buyers thinned out.  For now we have a confirmed break above the 100 SMA.  The bulls should be in full control lets see what they do with it.

The short term trend in SPX and COMPX has turned up.  The Russell2000 is very close but not quite there.  Just keep in mind I keep having to change the trend often this year and sometimes not long after changing it to up or down.  Follow through has not been this market's strength this year.  Resistance is likely to be around the prior swing highs at 2114 and 2119.  There is also possible trend line resistance from those swing highs around 2109-10.  According to Bespoke Mondays and Thursdays have been the strongest days this year.  The other days have an average loss so far this year. 

We did not have any tax selling this year to speak of.  Does that mean nobody sold anything significant last year?  The moves up have been weak and look more like an absence of sellers rather then aggressive buying.  Curious situation. 

I don't know if you have seen it or not, but Chinese and Hong Kong markets have been going nutso.  From what I hear it sounds like a mania has suddenly gripped people.  Hong Kong was up 10% this weak at one point I heard.  That is hardly sustainable.  It seems with real estate going down in China people are moving into stocks.  I am curious to see how that works out.  A real estate crash always seems to do serious damage to the economy.  Europe has surged to historically overvalued proportions in several key markets.  It kind of looks like we might be seeing blow off tops all around the world.  Hmm.

The week economic data continues to pour in.

The wholesalers sales went negative YOY for the first time in this recovery.  This is a limited data series, but you can see that the only times this happened we were already in recession.  Obviously this is not enough occurrences to be statistically valid.  However, this is definitely a caution sign.  This is a year over year look and last winter was actually worse then this winter.  Therefore it is not really so easy to say it was just a weather issue.  This is certainly going to lead to reduced orders which is likely to impact the manufacturing data before too long.

I am not exactly sure what to make of the inventory to sales ratio.  It is also the highest it has been in this recovery.  It is also higher then it was most of the last decade.  Back in the 90s it was often higher.  I wonder if this is affected by computers with more companies employing just in time inventory systems.  This could also be a big warning sign, but I can't say for sure.  It is clear that something is going on with the consumer despite the lower fuel costs.

The market and sector status pages have been updated.  Have a great weekend all.


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