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Wednesday, June 24, 2015

Daily update 6/24 Number of publicly traded companies

Was that Greece worries coming back yet again?

SPX is back below the lower channel trend line again.  Volume picked up a bit today.  The breadth was a broad based -67%.  New highs dropped way down to 84.  New lows were in the same area at 45.  We are back below 2110.  My theory was that would indicate we were in pullback mode again.  The bears need to see follow through on the downside for that to be a reality.  The news flow may determine whether that happens or not.

The decline stopped with the futures sitting on the 100 SMA.  The last time we were here we bounced.  This time we have red bars and a confirming lower close.   The bears have a little better odds this time. 

Both breadth indicators have negative crossovers today.  They have spent very little time in positive territory since May.  We have seen this a few times in this bull market.  The end result has usually been an upside break out.  However, in those instances we did not have so many stocks breaking down.  I don't think an upside break out is in the cards this time.

The stage is set for the bears to take control, but will they pounce.  Tomorrow is Thursday and most of the time that has been a rally day this year.  We have seen some big up days at that.  With the futures sitting on the 100 SMA that could easily happen again.  It probably will come down to the news flow tomorrow.  Should we continue down key support is around SPX 2072.  I think the market gets into real trouble if that breaks.

This was an interesting article about how much the number of public companies has decreased.  Where Have All the Public Companies Gone?  This chart was in there.

In contrast, mergers and acquisitions were a much larger source of delistings. The U.S. experienced an unusually high number of merger-related delistings after 1996 compared with both the U.S. historically and other countries. "From 1997 to 2012, the U.S. had 8,327 delists, of which 4,957 were due to mergers," the researchers wrote. This accounts for almost 45 percent of the delistings after the 1996 peak.

I guess my math is a bit different.  I think the mergers account for 59% of the delists not 45%.  At any rate there sure are a lot fewer companies out there these days.  The way we are going there will only be the 500 companies in SPX left some day. 


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