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Tuesday, April 26, 2016

Daily updatre 4/25

Another odd day.

SPX closed up slightly.  The odd thing was the breadth at +74%.  Money was clearly flowing out of big cap stocks down to small caps.  IWM was up nearly 1%.  New highs recovered somewhat to 74, but still rather low.  Since SPX hit 2100 the big cap stocks have been out of favor.  That could make it pretty hard to get SPX to new highs.  That money is flowing down to smaller caps likely because IWM is still well off its old high.  It certainly is not because of valuation.  As discussed many times IWM and IBB are bubble indexes.  I believe there is hope that if the market keeps going up the small caps will make up more ground on the way to new highs.  Will SPX actually be able to make new highs though?

The futures gapped up like usual on pre FED days.  The 10 AM bar closed above the 20 SMA, but the sellers went to work and sent the futures scurrying back down below it.  They are down slightly after hours.  Once again we are oscillating around the 20 SMA like we did earlier this month.  That pattern got resolved on the upside.  Can the bulls pull it off again?

The usual pre FED day bullishness was present just not in the big cap stocks.  The COMPX actually ended up slightly negative.  People are still buying, but they are dabbling in the small caps.  In the end everything will go where SPX goes.  If SPX starts down in earnest the buying in small caps will stop.

Tomorrow is FED day and who knows what they will say.  They are not expected to do anything, but that does not mean the market won't react.  After tomorrow people can get back to worrying about earnings and the sell in May thing.

SPX is on the verge of going neutral tonight.  The COMPX turned its short term trend down today.  It turned its trend neutral Friday and I missed it.  I must have been in too much of a hurry to get on with the weekend.  IWM is still up and made a new rally high close today.  Hopefully we will know more after the FED meeting tomorrow.


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