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

Monday, April 4, 2016

Daily update 4/4

Yucky day.

The bulls never showed any desire to push price.  The bears never showed any interest in selling into weakness.  Breadth was -65% indicating light selling in a lot of issues.  New highs dropped considerably to 147.  The bulls would really like new highs to stay above 90-100 on any pullback.  I find the volume pattern a bit troubling for bulls.  The blue down arrow marks the day SPX closed above the 200 SMA.  The blue horizontal line marks the general area where most volume bars have been since the blue arrow.  With the exception of the days around the Yellen speech the volume has been noticeably lower then before the blue arrow.  I believe the market is drifting higher because of a lack of sellers more so then aggressive buyers.  That means a sell catalyst could easily change the supply/demand balance in this market.

The futures lacked the ability to close above the resistance line.  They just pushed off the 20 SMA to make a second try at that resistance.  The fact it held again in that situation indicates it is significant. 

The green count slipped today, but is still above 50.  Since we were not overbought after yesterday's strong upside reversal the lack of follow through today is a bit of a yellow flag for bulls. 

Both breadth indicators had negative crossovers today.  One day off a new rally closing high indicates a very tired market.  We could easily be in pullback mode here.

The bull pressure chart is still positive on all time frames.  That should indicate that any pullback here should not be too deep before the dip buyers step in.  However the shorter indicators show significant divergences and the longer term indicator turned down today.  Combining these indicators with the exhausted breadth I would have to say this really could be the top.  While I think the dip buyers will step in on a pullback here I can't say the bounce has particularly high odds of a new rally high. A lot would depend on how deep the pullback got. 

A down day tomorrow should confirm we are in pullback mode.  The 20 DMA would be the first target.  Due to the size of this rally a poke through down to the 200 DMA would not be a surprise.  On the upside we will have to see if the bulls can push through resistance.


No comments:


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