Daily update 3/17 Business sales and inventories

The FED induced buying continued as FDX had good earnings and the dollar was hit again.   Strong sectors were the transports and basic materials.

This is day 24 of this rally.  The rally off the double bottom Oct. low lasted 25 days.  The setup was similar so the length of rally could come into play.  Today filled the big gap down at the start of the year.  There could be some resistance here.  There are no more downside gaps left to fill.  The breadth was an incredible +75%.  This long into a rally that is unusual.  Volume increased again.  That is almost like panic buying at this stage of the bounce.  I am starting to hear more and more calls for new highs in SPX.  New highs swelled to 177.  That is the highest since March of last year.

The futures are getting very extended from the 100 SMA.  Quite the buying panic.  For the last part of this rally the ADX has actually been falling.

The green count has once again reached overbought status.

Bear market rallies are truly amazing.  Today almost looked like panic buying like a buying climax.  Volume was not all that high though.  I guess it could still turn out that way.  The main theme the last two days was buying because the dollar was down.  The dollar was down of course because it had priced in more rate hikes.  Here is my question, what happens when people think about the reason why the FED pulled back on hikes was economic weakness.  Near as I can tell none of the problems that caused the early year sell off have actually been fixed.  Global economic data remains poor.  Oil inventories are still building.

The market is overbought.  While SPX filled the gap down from the start of the year neither QQQ nor IWM are even close to theirs.  Key indexes are lagging while sentiment is swinging towards bullish.  I think the market is doing a great job of fooling people the worst is over.  I don't believe that is the case.  I guess we will see.

Business sales continue to be lackluster. 

Usually data like this means we are in recession.

Source

Inventories continue to build.  I have been wondering how much longer businesses would continue to order stuff.  So far no sign of cutting back.  I wonder if the optimism is based on the low oil prices that are supposed to help consumer spending.  If you order it they will come.  I can't believe this situation will last forever.  Either sales pick up and start working off the inventory or production cuts are coming.  I know I have said similar stuff before, but it still applies.

Happy St. Patrick's day.

Bob