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Monday, April 25, 2016

Daily update 4/25

It looked like nobody really wanted to do anything today.

I wonder if investors are waiting to get a clearer picture on the earnings.  The breadth was -65%.  Oddly, new highs dropped all the way down to 35.  You would have thought we were down 2% or something with a number that low.  That shows a lack of confidence on further upside by the institutions.  SPX closed right around the downtrend line. 

The futures have been oscillating around the 20 SMA for the last couple of days.  They ended today below it, but still have not confirmed a break to the downside.

The green count slipped under 50 again.  The red count is creeping up so we need to keep an eye on that. 

The bull pressure chart shows upside pressure waning in the short term, but still positively crossed.  The green line in the long term indicator has eclipsed the last red line peak.  I can't be sure what this means because I do not have an historical pattern that looks like this.  It reminds me of the old saying every time you find the key to the market they change the lock.  The poor economic data and high risk of recession give this situation pretty high odds this is a bull trap.  It may go down in history as one of the biggest bull traps ever.  I am monitoring the data closely though in case it decides to turn up.  Until that happens I don't see how we can really give an all clear to stocks.

This is the tricky point.  We still have more positives then negatives in the short term, but one day could change that.  The next FED meeting is Wed.  It has been customary to rally the day before the last few years.  An up day tomorrow would not be a surprise.  The question is how much buying interest there could be with such a small pullback.  The big drop in news highs really signals a significant drop in enthusiasm.  I am not sure there is anything going on that will rekindle that at the moment.  While earnings are beating much lowered expectations they still are not good.  I have not heard much if any good comments about the rest of the year either.  That would be more troubling to bulls then the current earnings reports.  I would guess the odds are pretty good we don't do much until after the FED meeting.  If they hint at a hike in June or take June off the table for a hike we could see some fireworks. 


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