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Thursday, May 14, 2015

Daily update 5/14 PPI

SPX makes a new closing high.  It did not quite get up to the intraday high.

The futures were up considerably overnight after the European open on the basis of it being Thursday I guess.  Despite the sizable move volume declined.  The breadth was a whopping +72%.  New highs increased to 104, but at a new closing high that is still pitiful.  New lows were 24 at that.  They should be under 10 when making a new high.  The Dow is the only other index real close to a new high, but it fell a tad short of it today.  The transports lagged again.

Here we are back at the top Keltner channel.  The futures have had trouble getting above here.  At least the DI lines finally crossed positive.  ADX is falling again just like it has on every rally for months.  Not the strongest of charts here. 

We got positive crosses on both the McClellan oscillator and the 10 DMA breadth lines.  This is still a weak chart for a new closing high.  Sometimes the lines do what I call a bounce cross.  At this point they can cross back the other way very easy.  The bulls need to keep pushing us higher.

It looks to me like this is do or die time for an upside break out.  The charts are already in a weak condition.  A break out failure would likely add considerable selling pressure.  SPX only made 22 points not the 35 I joked about last night.  Therein lies the problem.  We got a new closing high, but not really a break out.  The breadth was super strong and still we did not quite break out.  My best guess is that we are going to fail.  I think there are just too many things wrong.  If we fail we are likely to fail in a big way so pay attention.

I wonder if this chart is keeping Yellen up at night.

In the last 70 years the PPI has only been more negative twice.  This decline goes beyond oil as many commodity prices have declined.  Can the FED even think about raising rates any time soon?  This is another piece of data that indicates we may be headed for a recession.  It will be interesting to see what the statement is at the next FED meeting.


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