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Tuesday, April 19, 2016

Daily update 4/19 Growth Myth

A mixed day, but a little more up in SPX.

SPX stuck its head above 2100 and held it at the close, but just barely.  Technology is lagging behind as the COMPX was red.  The breadth was strong again at +66%.  New highs bumped up to 195, almost getting back to 200.  Volume increased considerably today.  On a mixed day that indicates we had some sellers active.  I think we have at least minor resistance at 2100.  It remains to be seen how significant it is.

The green count reached overbought today.  That could slow upside progress.

The bull pressure chart shows the long term indicator getting extremely strong for a bear market.  This is actually higher then it got in either of the last two bear markets.  Investors are clearly piling in.  Time will tell if they are smart or not.  If this indicator surpasses the negative peak we saw back in Jan. it would be really hard to argue we are still in a bear market.  If this rally fails this is just adding fuel for bears.  If we break that Feb. low there will be quite a drop.

SPX has poked through the downtrend line, but it is too early to say if it is really broken.  With the market short term overbought it may have difficulty staying there.

After the close Intel said they are laying off 12000 people.  The semiconductor sector has already been lagging recently.  Another sign of economic weakness.  I have never seen such complacency about the economy in the face of such weakness.  All I see and hear is that there is virtually no chance of a recession anytime soon.  A recession in the next few months is certainly possible.  That would be like a black swan event based on almost nobody seeing it coming.  Either I am crazy or the market is.  In time we will find out which it is.  We need a profit taking phase to find out if there is really any substance to this rally.  Will investors hold em or fold em?

This is an interesting read.  The Great American Economic Growth Myth

This chart is self explanatory.

That is a large part of the reason the economy sucks.


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