Daily update 7/9

I guess selling was not quite exhausted yet.  They sold the gap up shortly after the open.

SPX managed to close positive.  While we have closed below the 200 SMA twice we do not have confirmation of a break with a close below the 7/7 low.  The breadth was +58% after starting out at +80%.  Quite a bit of selling into the strength.  The interesting thing was the new high count was 20.  That is only four more then yesterday which means the NYSE outage was not the reason for the paltry number.  New lows dropped down to 102.  If we get a bounce it will be important for new highs to pick back up considerably.  Otherwise it will end up as another failed rally.  This chart is still in a position to bounce.

While the futures were closed for end of day some Greece deal news hit.  That caused a gap when they opened up again.  They are now up considerably.  The trouble is we have been here before.  Will this proposal be the one?  The futures ended the day back below the rectangle, but at a higher low.  The news pop put them back in the box.  One of these days the market will decide.

Check out this put/call ratio chart.

The 10 DMA of the put/call ratio is the highest it has been since back in June of 2012.  Its even higher then last Oct.  The VIX just under 20 is a good bit lower then the other episodes in 2011 and 2012 where the 10 DMA got this high.  The spike up in June of 2011 was just a bit lower then now and the VIX was at 20 then as well.  In that instance we rallied but fell short of making new highs then tanked.  The VIX starting from a lower starting point gives it less room to drop and could limit the rally somewhat.

Everything seems to suggest we should be about to embark on a retest of the highs.  We have a good oversold condition at the 200 DMA.  What more could the bulls ask for?  Especially since July is usually the best performing summer month.  So far we have had a lazy down move.  Should we continue down from here price is very likely to accelerate.  What happens could easily be determined by the news flow from earnings, China, and Greece.  If the news flow permits it seems to me the most likely action is to go up.

I took a look at Asia and Latin America on the 401/IRA blog.  http://traderbob58-401k-ira.blogspot.com/

Bob