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Monday, April 11, 2016

Daily update 4/11 The Fed Can't Save Us

Pump and dump again today.

SPX closed below the 20 SMA.  Despite most indexes being in the red the breadth was +54%.  New highs ended at 111.  They have been hanging in there okay so far.  Odd couple of days as we started with gap ups, but saw the sellers come in at 10:00 and pushed down all day.  However, it was a gentle push.  Not exactly a rush to the exits yet.

Like yesterday the futures got above the 20 SMA this morning, but failed to stay there.  They are now back to the bottom of the recent range.  Will they break down this time or rebound again?

The red count pushed higher again and is approaching an oversold condition.  Another down day could do it.  This is odd.  The last two days had positive breadth, but the red count increased.

The 10 DMA lines are still positive.  The MCO while negative has come back to neutral from its oversold condition.  I don't really know what the internals are telling us exactly.   Maybe the market is confused.  Maybe it is just me.

There is an invisible hand holding the market up despite the intraday selling.  This condition usually gets resolved with a news induced thrust day.  In this case I suspect both buyers and sellers are waiting on the earnings reports to kick in.  Everybody knows this quarter will be bad so it will all be about future guidance.  The dollar headwind will be subsiding as the dollar has been range bound since last spring.  The economy still does not appear to be getting stronger yet.  I don't really know what companies will be saying.  I am sure it will move the market though at some point.  AA kicked the season off today.  It was up nearly 4% at the close, but is down nearly 5% as I write this on weaker then expected revenue.  People have been looking through the valley expecting earnings to trough this quarter and turn up again.  If investors get a sense that is not the case they will start hitting the sell button. 

The short term trends remain neutral, but are getting very close to turning down.  The bulls need to step it up if this rally is going to continue.

This is an interesting read.  The Fed Can't Save Us


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