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Wednesday, May 27, 2015

Daily update 5/27

Amazing what a little news can do.  The futures gapped up as expected after the high TRIN yesterday.  However, it was a rather weak open.  If not for news after the open I am not entirely sure we would have ended up positive.  The first bit of news was about yet another deal with Greece.  That sparked quite a bit of buying.  After that buying dried up we got rumors of a buy out in the semiconductor sector which sent tech stocks flying up. 

SPX reclaimed the 18 SMA.  SPY completely closed yesterday's gap down.  New highs increased to 65 while new lows stayed elevated at 45.  Volume was only slightly lower then yesterday.  Breadth was a strong +69%.  SPX crossed above the key 2125 level late in the day, but was unable to hold it going into the close.  Was that a one day wonder on the downside yesterday or is this a one day wonder on the upside today?

The futures ended the day right around the 18 SMA.  Both technical indicators are still negative.  That means the bulls have more work to do before they can declare victory.  They need to get a confirmed break above the 18 SMA, but even then there could still be lots of resistance near the highs.

Yesterday the selling started after the 8:30 AM U.S. economic news came out.  Markets around the world were largely positive at that time.  I would classify that as being fundamental data.  The buying today was on Greece and merger news.   That is not really fundamental to the broad market.  Isn't there always some agreement with Greece when it comes down to it.  The news will be when they default.  I suspect the fundamental news is more important and sellers may show up again tomorrow now that price has bounced back.  News induced moves like we had today are often retraced anyway.   If we end up going down the buyers today may end up fueling the fire as they are very likely weak hands. 


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