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Wednesday, July 22, 2015

Daily update 7/22 Percentage of up days

It was a mixed high volume day.  The utilities, retail, and financials were strong.  Market leading QQQ and IBB ETFs were both down.  Rotation out of the high flyers and into more defensive positions.

SPX closed slightly below yesterday's low.  The breadth was -58% which is pretty much inline with how much SPX was down.  New highs dropped a bit to 71.  The shocker today was new lows spiking up to 331.  That seems really, really high for the little bit we were down.  This type of action reminds me a lot of 2000.  The volatility was a lot higher so swings were much bigger, but.we had similar ups and downs.

The futures made a lower close in the night thus confirming a micro down trend.  Since May that has meant the rally peaked.  Bounces have made lower highs.  For today the 18 SMA proved to be resistance. 

The daily chart remains in a short term uptrend.  The futures are showing a micro downtrend.  There may be a bit of a battle here.  The news flow might have a lot to do with what happens the next few days.

More then half the trading days have been down this year according to The S&P 500 Index (SPX) has done something this year it's never done before

There have been 138 trading days thus far in 2015. Looking at each year since 1950 (66 total years), after 138 trading days, this is just the 16th time that more than half of the days were down days for the S&P 500 Index (SPX). Interestingly, of those 16 years, this year is the only time the index has been positive, as it is up 2.93% in 2015. You can see in the plot below that 2015 is the only point in that upper left quadrant. As you would expect, there's a pretty strong correlation between the number of up days and the percent return for the SPX. However, does the percentage of up days at this point in the year tell us anything about what the rest of the year might do?

The bulls have made full use of the few up days there have been this year.  Many started with big gaps to the upside.  What about the rest of the year?

It looks like we only have about a 53% chance of the market being up the rest of the year.  Doesn't this smell a lot like a pump and dump scheme?  Every time stocks get close to breaking down they pump them up, largely overnight.  Once they get back near the highs they start selling again.  It looks like massive distribution to me. 

Posted some thoughts on Europe on the 401k/IRA blog.  http://traderbob58-401k-ira.blogspot.com/


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