SPX got two points above the 200 SMA before turning down and closing in the red. Breadth was -60% which was a bit worse then the move down in SPX. Today kind of makes yesterday look like it might have been a one day wonder. If there is downside follow through tomorrow that is probably the case.
The futures tried to get above the 20 SMA, but failed. That is an oddly tight range on the close of the last several bars. That does not instill much confidence in further upside, but they have not rolled over yet either. At the highs today the futures got into the 11/12 big downside gap. However, there was nothing but sellers waiting there. That could be very formidable resistance.
If this bounce is going to continue the bulls need to show up strong in the morning. Since we have not clearly rolled over yet, that is a possibility. Further downside tomorrow should indicate a resumption of the down trend.
The latest IP came and it was yet another negative reading.
Still no sign of a pickup in activity. However, it is not falling very fast and is still above where it was earlier in the year. Lets take a look at the YOY change.
IP is now barely positive YOY. It is the lowest reading in this recovery. Because of the surge in the data last Nov. and Dec. if we do not get a really big surge next month it will be a negative reading. That would not necessarily mean we are in a recession, but in general that is not a good thing to happen. As you can see from the chart above more often then not a negative reading is associated with a recession.
Bob
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