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Monday, July 11, 2016

Daily update 7/11 Last man standing?

Success.  SPX closes at a new all time high by 6 points.  Woo hoo.  Now can the bulls keep it there.

Not much volume on this break out.  Can't say as I blame anybody for not wanting to buy right here.  I guess today's buying was brought to you by speculation of "helicopter money" in Japan.  That was fueled by our very own Ben Bernanke paying a visit to see the Japanese officials.  Breadth was strong once again at +66%.  New highs picked up a bit more to 347.  SPX has a rare expanding volatility pattern.  It is often a reversal pattern, but I don't have any stats on that.  It generally means higher volatility.  Whether the market continues higher or not it is likely to have more volatility then the last couple of months. 

The last three bars closed within 1.5 points of each other on the futures.  They ended the trading session a whopping 1 point higher then the 2:00 AM bar close.  In other words today's gains were largely made overnight.  What happens now?

The green count slipped a bit which is normal under the circumstances.  There was a little bit of profit taking.  It will be interesting to see how much more this slips in the next few days.

The short term bull pressure line has turned down a little bit.  The long term line is slightly below where it was at the 5/20/15 prior ATH close.  Since this indicator is not particularly strong here we don't have an all clear on this break out by any stretch of the imagination.

This is a look at the equal weight S&P 500 index (SPXEW).  As you can see it is slightly negatively divergent.  That means the biggest of the big caps are responsible for the new high.  SPXEW was at a new high with SPX at the May 2015 high.  I don't think we can truly say the S&P 500 has broken out until this index also makes a new high.  That is only about 1.5% away.  I will keep an eye on it and see what happens.

In late Oct. 2007 the NDX 100 made a new bull market closing high.  It was the only major index in the world that was at their highs.  I wondered if it was a case of the last man standing and indeed it was.  We all know what happened in 2008.  While SPX made a new closing high today it is the only major index in the world to do so.  Most global indexes are well off their highs.  This could easily be another case of the last man standing.  It will not stay there without more participation.  If there was a break out that looked destined to fail this is it.  Curiously the VIX had a low of 13.00.  It never traded below 13 and that happened pre-market.  During the trading day it only traded down to 13.10.  It did not technically trigger a VIX sell signal, but may be close enough.  A few days ago I said it was do or die time for the bulls.  They did step one by getting SPX to a new high.  However, they must keep it there or the market will still collapse.  Lets see if anybody is brave enough to buy at the highs.


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