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Thursday, June 30, 2016

Daily update 6/30

I think we finally found some resistance.  SPY got up to the 6/24 gap close level and stopped for the last couple hours of the day.  There was a late day push to get through that resistance, but as we know those last minute moves are not reliable indicators of future direction.

What a boomerang move.  SPX closed less then 2 points below the key 2100 level.  That is quite a three day panic buying spree.  Breadth was strong once again at +77%.  New highs soared to 396.  As I suspected there were a number of the beaten down commodity stocks making new 52 week highs, but not new all time highs.  Volume was above average all three days.  So in the long run who is right, the sellers or the buyers?

The futures ran right up to the upper channel line.  Quite the chart.

The green count crossed above the red line today, but remains below 50.  Considering SPX is back to key resistance at 2100 this could be indicating a serious negative divergence.

All three bull pressure lines have positive crosses, but all three are just barely there.  Like the red/green count chart this might be showing some significant negative divergences.

The NYSE bullish percent chart shows the technical damage on the downdraft was not undone on this rally.  This is the weakest this chart has been with SPX at 2100 all year.

After the brexit vote stocks tanked.  On the other hand gold, bonds, and the dollar all rallied.  Of those four assets only stocks retraced the move.  While the pundits are out screaming brexit is no big deal I don't think it is safe to assume that.  Shouldn't some of those other assets have retraced a good bit of the move as well?  Here we sit with SPX just shy of 2100 and market internals are the weakest they have been all year with SPX in this area.  If the market can break out to new highs from this condition I would consider it a miracle.

In recent years the last day of the month has been down most of the time.  Today it was up strong.  In either case the first day of the next month often goes the other direction.  If it follows that pattern tomorrow will be down.  The last three days have seen very small intraday pullbacks as sellers were not aggressive at all.  With the SPY gap closed sellers may come out of the wood work.

SPX turned its short term trend to neutral, but the other indexes did not quite make it.


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