When the sellers couldn't break the market down this morning short covering took over. Volume was pretty heavy again today. The breadth was a solid +69%. New highs were still low at 35. New lows dropped considerably down to 191. SPX ended just below the key 100 DMA. There is a possibility that could be resistance now. We will have to see how the market reacts the next couple of days. The 50 SMA is up at 2100.
The futures ended the day right at the 100 SMA. The 200 is five points higher and the 20 SMA is another three points higher. Sometimes we will contact that MA before rolling over. It will be lower by morning though.
We have had plenty of strong days this year that saw no follow through. This could be a one day wonder on the upside like so many others. SPX came to a stop this afternoon when it hit the 100 DMA. Whether that resistance is insurmountable or not is an open question. One thing is for sure. Traders have been conditioned to sell rallies. I think they will continue to do that. At the last low I showed the 10 day MA of the put/call ratio being the highest since last Oct. We also had unusually bearish AAII sentiment. That combination in normal circumstances should have propelled SPX to new highs. Since that did not happen sellers might become a little more aggressive then they have been the last few years. Tomorrow is FED day and that can be a bit of a wildcard. If the FED changes the language in the statement it could affect the market. I will leave predictions to others. For the moment the bulls still have work to do. We are still in a short term down trend.
This is an interesting article that kind of explains how Keynesian economics became so popular. I always wondered since it makes no sense to me. "The Bucks Stop Here": Why Keynesian Economics Will Get Blamed For The Crash
Posted a look at high yield bonds on the 401k/IRA blog. http://traderbob58-401k-ira.blogspot.com/
Bob
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