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Thursday, April 7, 2016

Daily update 4/7 Stocke buybacks

Sellers showed up with more force then they have been.

SPX closed fractionally below the 20 SMA.  The breadth was -74% which shows broad based selling, but not extreme.  New highs dropped down to 75.  That is not a particularly good sign.  SPX broke down through the bottom of the recent range and continued down a bit.  Another last hour rally brought it up to the bottom of the range.  Will it find resistance there or was this just a stop running exercise before going higher?

The futures got a confirmed break of the 20 SMA.  In looking at the chart it looks more like consolidation then a true break down.  The bears have more work to do.

The red count crossed the 50% threshold and got close to an oversold condition.  Theoretically the bears should be in control.

The short term bull pressure indicator got a negative crossover today.  The intermediate one is getting pretty close.  Another theoretical sign the bears are in control in the short term.

The MCO in the bottom panel is in slightly oversold territory.  The 10 DMA lines are almost on top of each other with the green on top.  A mixed message here.

This time of year can be a bit tricky because of selling for tax purposes.  Even though the market was not up much last year there were some stocks that made big moves.  Today could have been about raising some cash to pay the tax bill.  Today turned the short term trend to neutral across the board.  It did not do enough damage to any of the indexes to turn them down.  While late day rallies like we had today are not very reliable at determining future direction this one went just enough to muddy the water a bit.  With SPX right at the bottom of the recent range it could just as easily pop back into it tomorrow as sell off.  Bears need to see downside follow through tomorrow.  I think the bulls still have a chance to save the day, but I have no idea whether they will or not.

I am sure I have mentioned a number of times I am anti stock buyback.  I think it is one of the stupidest use of funds there is.  It is even worse when companies borrow money to do it.  It does nothing to generate future revenue.  The transaction itself is giving money to ex share holders.  Here is an interesting article on the subject.  Buying Dollar Bills For $1.10


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