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Friday, May 29, 2015

Daily update 5/29 Explantion of resiliant market

The bears showed up today, but strength in the SOX helped hold the market up.  Well that and yet another Greece rumor.

SPX closed back below the 18 SMA again.  We are doing a lot of waffling around here.  Volume was heavy, but that was due to some index rebalancing.  New lows topped new highs 58 to 56.  Breadth was -66%.  The weekly chart is rather interesting.

Odd combination of bars the last few weeks.  The last three especially.  That is a hanging man followed by a shooting star.  This week confirms that bearish combo.by closing below last weeks low.  While the bulls have tried to push the market higher it just won't go at the moment.

The sellers came out today after the green price bars from yesterday.  That suggests we are likely in a short term downtrend.  I am giving the trend table a downward bias tonight, but I want to see more downside follow through before changing the short term trend to down.  The market has been so choppy I don't want to jump the gun.  The -DI line got up to 34 again.  There sure are a lot of high readings.  That is something we have not seen in this bull market.  I guess time will tell if it is important.  Price held the 100 SMA today.  The bears need to see a confirmed break of that MA.  The bulls probably have one last chance to pull out another stick save.  What will June bring?  It is a weak month historically and we are setup for a pullback. 

Monday should bounce or confirm the break of the SPX 18 DMA.  Everything I see points to a break down.  However, Monday's have been up this year so who knows.  At any rate the bulls have some work to do to get full control back.

I heard a guy on TV this afternoon say he did not understand why the market was so resilient this year.  He started naming off all the things that are wrong.  It is pretty simple really.  Late last year Wall Street went on a campaign to make sure that everybody knew that year 5 is always bullish.  On top of that we have the 3rd year of the presidential term often good for a +20% year especially in a second term.  I commented on these things in the blog a few times.  You can't lose this year.  It is impossible right?  So every little dip gets bought because you can't lose.  The market is going to race up you can't wait for a bigger dip.  You can't risk being left behind.  I am pretty sure that is all there is to it.  What Wall Street did not tell you is that we have never had either of those positive things happen after SPX was up six years in a row.  SPX has never been up seven years in a row.  I guess something unusual is going to happen this year.  We have all the classic signs of a bull market top.  Be aware.

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


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