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Tuesday, February 16, 2016

Daily update 2/16

The bulls came out to play once again.

SPX closed above the 20 SMA for the second time this month.  The breadth was +79%.  The volume was slightly higher then yesterday, but still relatively low.  The  new highs were very low again at 22.  New lows dropped way down to 53.  The apparent double bottom attracted some buyers today.  SPX has not been able to post three up days in a row this year.  A pause tomorrow would not be surprising.

The overnight session saw a confirmed break of the 20 SMA.  The futures are testing the upper Keltner channel.  The last time they did that it was resistance.  However, we have a double bottom in place this time.  A pause here would not be a surprise due to the size of the move up, but the sellers might not be in quite as big of a hurry to jump in here.

The green count crossed over the red count today, but is still below 50%.  This indicator is in that grey area where neither side is truly in control yet.  However, the bulls have the edge for the moment.

Today's big move turned the short term trend to neutral across the board.  If we were still in a bull market it would obviously be highly likely the market would keep going up here.  However, we are in a bear market so it is not quite so cut and dried.  The news flow could easily bring the sellers back out.  If we continue higher the 50 DMA would be the next target.  It is moving down pretty fast so the area where SPX would contact it would depend on how many days between now and then.

Regardless of how long this bounce lasts a break below the 2/11 low is likely to cause a cascade lower.  The exit will be crowded.


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