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Monday, June 27, 2016

Daily update 6/27

More non panic selling.  This feels a lot different then last Aug.  People were scared to death.  Now everybody seems to be pretty calm.  That is not usually a good thing for bulls.

That is a lot of volume.  SPX closed below the 200 SMA.  Breadth was -79%.  New lows spiked up to 140.  Quite a few stocks must be breaking down again.  Not good for bulls.  That looks like consummation of a top to me.  SPX is back to early March price levels.  There are a lot of buyers underwater.  While people are getting on TV and saying not to panic their offices are probably trying to unload as much stock as they can. 

Quite a chart.  That looks oversold to me.  Whether its enough for a bounce remains to be seen.

The red count is clearly in the oversold area now. 

The long term bull pressure lines got a slight negative cross today.  Selling pressure is starting to mount. 

While SPX was down 1.8% the VIX was oddly down 7.4%.  There was no panic put buying to hedge long positions for sure.  I wonder if people were loading up shorts and buying calls to hedge them.  That would be bear market behavior. 

SPX closed below the 200 DMA, but we do not have a confirmed break yet.  The market may be oversold enough for a bounce.  Will the bulls make a stand here for the 200.  Of course they may all be too busy trying to get out of Dodge at the moment.  There was a lot of talk about recession worries in Europe today.  There is ample data showing people should have already been worried before the brexit vote.  While the vote may get blamed if things fall apart in Europe the truth is European stock markets were already 15-25% off their highs.  The vote did not cause that.  However, it is possible the vote has now woken investors up to the risks of a global recession.  They have been very busy ignoring all risks the last several months.  We have an oversold condition and a good place to bounce from.  Lets see if any bulls take the bait.  I don't see anything here that looks like an important bottom.  I would expect any bounce to eventually fail.


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