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Monday, May 23, 2016

Daily update 5/23 My Scary Chart (article not my chart)

No upside follow through.

The bulls tried to rally the market pretty much all day.  They were busy buying dips, but nobody was interested in chasing price higher.  Some sellers came into the market late in the day.  Most likely because it became apparent there would be no upside follow through from Friday's bounce.  The breadth was slightly positive, but the volume was largely in down stocks.  New highs were low once again at 52.  New lows were also low at 13.  So far this bounce has fallen short of both the 20 and 50 SMAs.

The futures closed back below the 20 SMA, but have not confirmed the break yet.  Is that it for the bounce?

The red count slipped again today, but is still above the green.  It is now well away from getting an oversold reading.

According to the pattern in SPX since the high (3 down days and bounce) the bounce should have ended with today's down move.  If that pattern repeats we should see two more down days in a row.  SPX is barely above the key 2040 level.  Two down days would surely cause a serious break down.  While dip buyers have been rushing in to buy the down moves, the bulls have clearly been unwilling to chase price higher.  Until that changes we will go lower.  The FED is threatening to raise rates and there is a lack of an oversold condition.  Both of those things are probably putting a damper on buying enthusiasm.  If tomorrow is up we would have a pattern change, but I still doubt a bounce here goes very far.

This is an interesting article from an ex FED person.  My Scary Chart  There are several interesting charts in that article  Well worth a few minutes.


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