If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Wednesday, March 16, 2016

Daily update 3/16 Industrial Production IP

Nothing like an unexpectedly dovish FED to bring out a few buyers.  Likely a good bit of the buying was short covering.  I think many people were expecting a more hawkish statement today.  Was this an admission by the FED that the economy is weaker then they have been letting on?  I listened to the press conference and I have to say Yellen was quite confusing at times.  I know the economy is weaker then they have been indicating.  Maybe the FED is starting to figure that out.  Better late then never I guess.

SPX is clearly above the 200 SMA now.  It did that last fall and failed to stay there.  Historically it is unusual to stay above the 200 as long as we did only to fail.  I expect this time will not take as long.  The breadth was +71% so there was broad based buying once again.  New highs jumped to 101.  That eclipses the previous rally high of 94.  New lows came in at 15 which is a bit higher then they have been running.  SPX closed about 3 points above the 3/14 high.  While it was a thrust day we did not get very far into new ground for this rally.

The futures spent the day chopping around until the FED announcement.  They jumped about 15 points in the next 3 minutes.  Every dip was bought after that, but the futures closed only about 2 points above the initial surge.  There must have been plenty of sellers around since we did not keep on climbing.

Today gave the green count another thrust up.  It is getting close to overbought again.  It is still showing a sizable divergence.  We will have to wait and see how that plays out.

You probably know what I am about to say.  Whatever happens on FED day quite often gets reversed over the next couple of days.  The VIX dipped below 15 during the buying spree.  This is about as low as it has gotten in past bear markets.  Now that all the central bank meetings are out of the way for a while some sellers may emerge.  Further upside might be tough to come by. 

Today turned the intermediate trend for SPX to neutral.  This would be a good technical condition for this rally to end.  Will the bulls keep on pushing?

I did not show the IP last month as there was a big jump up caused by the warm Dec. and more normal Jan.  That caused is big spike in utilities.  Here is the latest data.

IP dropped this month and remains below the key 12 month MA.  For the economy to get out of trouble we need to see a sustained uptrend in this key piece of data.

This is the 4th month in a row YOY IP is negative.  I cannot find an instance of that happening historically that was not associated with a recession.  We are still on recession watch.


No comments:


The information in this blog is provided for educational purposes only and is not to be construed as investment advice.