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Tuesday, May 5, 2015

Daily update 5/5 Thud

I guess some people decided it was a good idea to sell in May this year.

SPX closed slightly back below the 50 SMA.  Volume picked up a bit.  Breadth was a very negative -77%.  New highs dropped down to 45 while new lows picked up to 51.  The TRIN was once again low at .99.  That makes today unlikely to be a significant low.  We might just be getting started on the down side.

The futures once again found support at the 100 SMA.  The last bounce was extremely weak despite a modest short term over sold condition.  We don't have blue bars like last time.  Will the 100 SMA hold again? 

The dip buyers have come in to support the market on every sell off.  However, unlike recent years nobody is showing up to chase price higher once the initial over sold condition is alleviated.  Recently we seem to be seeing sellers becoming a bit more aggressive.  I think the dip buyers are stepping in too early.  We were getting much more over sold conditions in recent years that allowed the market to easily push to new highs.  The end result appears to be a lot of dip buying fuel being used up with little to show for it.  It won't take much of a correction to put everybody that has bought in the last 6 months underwater.  That might create more selling pressure then we have been seeing in recent years. 

I keep reading articles from people expecting this trading range to get resolved on the upside.  In a normal bullish trading range the market does a lot of downside testing and usually scares people because it looks like it is going to break down.  Only it never does.  Sentiment is still extremely bullish here as we keep testing the upside, but can't get going.  That is more indicative of a top then a bullish trading range.  The extreme low number of new highs recently should be a cause for concern for bulls.  This market looks totally exhausted to me.  I am not sure I have ever seen it look more tired. 


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