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Friday, May 27, 2016

Daily update 5/27 Factory orders

A little more up.  There has been zero selling pressure this week.  I heard them talking on CNBC about a lot of people headed to the Hamptons.  That got me wondering if the rally this week might have been caused by the big boys to get the market to the upper end of the trading range.  That would allow them to take next week off without having to worry about the market breaking down.  Just a thought. 

I cleaned up the daily chart a bit.  SPX closed just 3 points below the highest close for this rally.  The breadth was strong again at +61%.  New highs came in near yesterday's number at 84.  Being under 100 is not particularly good. 

The futures broke out above resistance this afternoon after most people were gone for the weekend.  Time will tell if that is a move that holds up.  Pretty straight up move huh. 

The green count reached minor overbought status today.  The last time it was this high SPX started a multi week pullback.  Lets look at the weekly version.

On the weekly chart the green count is still below 50 on this retest of the high.  Quite a divergence. 

Next week is likely to be thin and choppy with many big boys on the beach.  No telling what happens.

Yellen caused a bit of a dip intraday when she seemed to indicate things looked pretty good for a rate hike soon.  That sparked a lot of discussion whether a rate hike in June or July was priced into the market.  The general consensus was the rally this week indicated it was.  Based on what happened after the last hike I would say there is no way to know.  While the market did not sell off immediately after the hike a few weeks later SPX was down 10%.  The initial reaction might not be the final reaction.  I feel like the market is more vulnerable this time.  It is clear that a lot of people piled into the market after the Feb. low.  The rally off the Oct. low was more about short covering.  If there is a significant negative reaction now there are a lot more fresh longs to panic out.  The FED has set the table for a hike at one of the next two meetings.  Unless the markets tank or the economic data takes a serious dip in the mean time there will be a hike. 

To AAPL holders.  The news that Buffet's group was buying AAPL stock sparked a decent rally in all tech.  That news may actually be part of the reason for the general bounce we saw.  Buffet did not pick this stock.  The new chief investment officer did.  The same person that picked the only other tech stock Buffet has ever invested in IBM.  The last I heard Buffet was down more then $2 billion on IBM.  It looks to me the smart phone market is getting saturated and AAPL is a one trick pony at the moment.  While Buffet is piling in, long time AAPL holders Icahn and Tepper bailed out after making billions.  This stock is a hedge fund darling so there could easily be many more money managers wanting out.  They seem to follow Tepper like he is the magic man.  This stock may have seen its better days for quite a while.

Yesterday the latest factory order data came out way better then expected.  However, it was because of massive airplane orders.  Boeing screws up the data so much the headline number is useless for analysis.

A look at the consumer durable goods data shows it is still neg. YOY.  No real upturn here yet.  If you want to see that the government has trouble counting check out US Government Quietly Cuts Historical Capex Data By Billions Of Dollars

The market and sector status pages have been updated.  Have a great weekend and remember those that have fallen to preserve our freedom.


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