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Wednesday, July 6, 2016

Daily update 7/6 Commercial Bankruptcies

Hmm, that is interesting.  SPX closed at 2099.73.

The bulls tried a late day run to get above 2100 and at 3:58 PM it was actually there.  They just could not hold it into the close.  Breadth was +60%.  That was quite the reversal after being -70% early in the day.  Dip buyers came piling in.  New highs were close to yesterday's number at 251.  New lows increased to 44.  That is pretty high with SPX just a few points below its recent highs.

As I write this the futures are down a few points from the close.  This morning's bounce started right from the 50 and 200 SMAs.  The question is was that just a bounce or the start of another leg up. 

The green count crossed 50 today, but is still below the overbought level.  However, this is an artifact of lower price bars falling off.  The count could actually continue to rise without price appreciation because of the odd nature of the brexit move.  I am not sure how meaningful this chart is at the moment. 

This is the monthly 13/34 EMA cross chart for all  NYSE composite index stocks.  As noted in the blog previously prior drops below 60 have been associated with recessions, but not necessarily immediately.  The rally off the Feb. low has stopped this indicator from getting worse, but it certainly has not turned up by any means.  I still think the market is indicating a recession is coming.  If the current price formation was a pause before going higher I don't this indicator would have dropped below 60.  That is my story and I am sticking to it.  Well, at least until proven wrong.

The bulls showed up today and bought with both fists  However, they failed to get SPX above 2100.  SPY closed yesterday's gap down though.  That makes the current setup pretty interesting.  With the gap closed there is no more "work" to do on the upside.  If SPX is going higher it will have to be because bulls show up and are willing to chase prices higher.  I am not too sure that will be the case.  With the gap closed if the bears show up tomorrow people may be more willing to sell then they were the last two days. 

This is an interesting article.  The Big Unravel: US Commercial Bankruptcies Skyrocket

Total US commercial bankruptcy filings in June soared 35% from a year ago, to 3,294, the eighth month in a row of year-over-year increases, the American Bankruptcy Institute (in partnership with Epiq Systems) reported today. During the first half, commercial bankruptcy filings soared 29% to 19,470. Among the various filing categories:

I have noted in the blog that credit standards have tightened considerably over the last six months.  This data indicates that is likely to keep happening.  We may already be in the downward spiral into a recession now, but I can't say for sure.  If we are past the point of no return the economic data will probably accelerate downward in the next 6 months. 


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