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Thursday, May 19, 2016

Daily update 5/19

This market reminds of the story of the frog and the pot of water.  The market is going down so slow it is not scaring any bulls.  The problem is traders are a little smarter then frogs.  They will eventually realize the water is getting hot and then all jump out at the same time.

This is the lowest close since 3/28.  The water is definitely getting warmer.  SPX tested the April low and bounced back to close marginally above 2040.  The bulls are definitely supporting the market here.  The problem is rallies are getting sold.  The breadth was -67%.  New highs dropped way down to 25.  New lows increased to 40.  This is the first time new lows outnumbered new highs since coming off the Feb. low.  The market continues to weaken.

The futures hit the 200 SMA this morning and bounced the rest of the day.  Will the bears sell that bounce tomorrow or will the bulls show up to keep the bounce alive?

The red count remains over 50 and well below over sold levels.  The bears remain in control for now.

The short term red line is the highest it has been since the rally peaked.  The intermediate lines are separating and the long term lines are coming ever close together.  Nothing bullish going on in this chart yet.

The slow drip down in price is consistent with a bear market.  No worries.  Prices will come back.  Just stay the course.  In fact I heard a clip of Cramer on CNBC telling people just that.  Nothing to worry about.  Stay the course.  I have seen this rodeo a few times.  I know how it plays out.  The lack of fear when the market is going down prolongs the move down.  Then the panic ensues along with considerable losses.  SPX held key support today.  Whether that turns into a bounce in the morning is hard to say.  Until we get more over sold I would expect any bounce to be short lived.   

Interesting article with lots of charts.  3 Things: Everyone Gets A Trophy, Inflation & RCube

Nobody emailed me to explain to me how AAPL has $200 billion in cash.  I guess Wall Street has invented new math where addition and subtraction work differently then what I was taught.  They must have shared this new math with the media (since the media does not point out the error), but failed to enlighten the rest of us.  Maybe someday I will get lucky enough to learn the secret.  I would also point out that AAPL does not bother to mention they don't have that kind of cash either.  The truth does not matter these days.  It is much more important we spend oodles of time discussing what bathroom people should use.


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