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Tuesday, June 28, 2016

Daily update 6/28

Bulls show up right on cue.

SPX closes back above the 200 SMA.  Volume dropped off considerably.  Breadth was a strong +81%,  New highs came in at 183.  I am not sure how meaningful that is though with all the closed end funds making highs.  I wonder how long the bounce lasts.  Contact with the 20 SMA could be in the works.

The futures are up a bit as I write this.  With any luck the bounce will continue tomorrow.  A bounce back to the 200 SMA would take another 30 points.  That could be considerable resistance.

The red count is still in the oversold zone.  A continuation of the bounce seems likely.

There was a lot of technical damage done in this sell off, but there was no panic.  Normally that means at least a retest of the low is in order.  However, the bulls have been pushing SPX back to 2100 after every pullback for the last 16 months.  I don't know if we can rule that out.  This market has been very good at closing downside gaps in SPY.  That would be a trip up to 209.27 this time.  How far up we go depends a lot on whether investor psychology has changed or not.  Since the Feb. low investors have been of the mindset that everything is fine.  Q2 will be the earnings trough and it will be onward and upward.  I think it is possible that psychology might have changed.  However, we can't know that yet.  How this bounce plays out should tell us a lot.


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