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Monday, June 1, 2015

Daily update 6/1

SPX held true to the up Monday pattern we have seen this year.  However, sellers showed up late in the day and took away a lot of the gains.  With the pattern being down Tues. and Wed. that might be be a bad omen. 

While we had an up day SPX did not do enough to get back to a white price bar.  It is also still below the 18 SMA.  We still don't have a confirmed break of the 18 though.  The bulls are trying very hard to keep the market from going down.  Their behavior is really quite different then 2013 and 2014.  We often had little selling panics that created oversold conditions that brought out the buyers to send the market sky rocketing.  The buyers keep coming in on tiny little dips the last few months.  We can't get that good oversold condition that really brings out the buyers.  Hence the rallies stumble.  It looks to me like we are using up a lot of dip buying fuel without making any significant upward progress.  How much longer will dip buyers keep piling in if we do not get some upward motion going?  The breadth was a weak +52%.  New highs barely outnumbered  new lows 69 to 63.  That has the look of a dead cat bounce to me. 

The futures found support at the 100 SMA yet again.  You can also see SPY getting strong support at the 60 minute 200 SMA.  The futures keep hitting resistance at the 18 SMA.  SPY keeps hitting resistance at the hourly 50 SMA.  The indicators remain bearish.  With the 18 and 100 SMAs coming together price will break one of those pretty soon.  Since the market is running on fumes a downside break could be quite significant. 

Everything I normally look at suggests we should see more downside.  This choppy pattern is not giving us very clear support levels.  The 100 DMA is at 2081 which is probably the first good support level.  Can we magically bounce again from there?  Should the 100 break the 200 DMA around 2042 is likely to be hit in fairly short order.  That is what happened in the Ebola scare last Oct.  I would expect a similar mini cascade.  Lets see if the bulls pull out another miracle here or if the bears grab the power tomorrow.


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