If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Tuesday, May 3, 2016

Daily update 5/3

Reverse again.

Yesterday's up move was lethargic internally.  Today's down move came on very negative internals.  The breadth was -72% and the downside volume was 84%.  The damage was mitigated as the dip buyers came to the rescue midday and held the market up.  Whether that was a good thing depends on whether the market keeps going down or not.   New highs dropped a bit to 96.  New lows increased to 28 which is the highest level since 2/24.  Selling pressure is picking up some.

The 20 SMA crossed below the 50 today for the first time on this rally.  The futures are trying to find support on the 100.  Will that break or hold?

The red count popped up, but is still slightly below 50.  Obviously nowhere near an oversold condition.  It may be enough to say the bears are likely in control.

The short term bull pressure chart got a negative crossover today.  This is the second cross on this rally so the odds are increased somewhat that it is a good signal.  However, the intermediate and long term indicators are still showing good strength even if they are waning somewhat.  That usually means a move down will be choppy with dip buyers stepping in.  If the market keeps on going down those buyers will end up bailing out and causing a mini cascade down after the intermediate lines cross.  Shorts are a little tricky to manage with that underlying strength in the longer term indicators.

The R2000 index turned its short term trend down today and closed back below its 200 DMA.  That makes it just a bit harder for the bulls.  Today looked like worries about the global economy resurfaced.  Check out the chart of UUP the dollar bull ETF.

The dollar has had quite the move down this year.  It is in the process of testing its prior correction low from last Aug.  It has finally worked off the excessive bullish sentiment that built up from the massive rally that started in 2014.  I am seeing calls for a dollar collapse.  As you all know I don't believe that is in the cards.  Today was a key reversal day and look at that volume pattern.  A high volume down bar yesterday and an even higher volume upside reversal today.  Coming in the area of a retest.   UUP is further below that Aug. low then the actual dollar index is due to tracking error.  The dollar index closed today well back above its Aug. low.  I think this is the bottom for this move down in the dollar.  An upside reversal could put some pressure on oil and other commodities.  That could include gold.  I will be watching the dollar closely to see if it follows through on the upside reversal.

We have short term downtrends across the board.  We do not have a short term oversold condition.  That should mean that bounces will be short lived for now.


No comments:


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