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Tuesday, April 5, 2016

Daily update 4/5

Downside follow through.

SPX tested the 4/1 low and held for today.  There seemed to be a reluctance to sell into weakness.  When the market bounced the sellers showed up though.  The breadth was -67%.  New highs dropped a bit again to 99.  New lows increased to 20.  We did not do any technical damage on the daily chart yet.

The futures closed below the 20 SMA again, but still have not confirmed a break.  Every other time we got below the 20 on this rally the bulls showed up the next day.  Will the bears pounce this time?

The red count crossed about the green today and is the highest it has been on this rally.  This is the best chance the bears have had to take control.

The short term bull pressure lines got close today, but still have a positive cross.  Other internals look like we have started a pullback.  The futures still need to confirm a break of the 20 SMA though.  The bears have the bulls on the ropes.  Will they take advantage of that?

I have seen lots of people saying no need to worry about recession in the U.S.  I would be willing to bet a lot of money that none of those people have ever actually seen a recession coming.  The economy is still very weak.  I suspect we will find the warm winter has screwed up the seasonal adjustments enough to make it look like we are stronger then we really are.  Now that we are moving into spring that will be less of a problem.  The economy is weak enough that we do need to worry about a recession.  Anybody that says otherwise has no clue what they are doing.


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