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Tuesday, September 27, 2016

Daily update 9/27 “Negative Growth” of Real Wages

Bounce day.

SPX closed just above the 20 SMA.  Interesting that SPY has a bullish engulfing bar today.  Breadth was +57% which is not particularly strong.  New highs increased a bit to 82 which is also not particularly strong.  This morning SPX retraced back to where the FED announcement move started and buyers showed up.  Probably the same people that piled in after the announcement.  The trouble began when SPX got above yesterday's high mid day.  The rally came to a halt and the market traded sideways into the close.  The overhanging offer again. 

The futures ended the day about where they were at 2 AM.  They are back above the 50 and 20 SMAs.  It looks like a triangle may be forming here.  Breaking the lower trendline would likely bring out more selling. 

The green count picked up a bit, but remains below 50. 

This market is struggling.  Whether there is any upside follow through to today's bounce is hard to say.  The triangle pattern forming on the futures suggests a trip to the upper trendline might be in order.  However, there was clear resistance at today's high.  It is not clear how significant it was.  It could always be insurmountable at this point in time.  Market internals are weak, but slightly favoring the bulls.  However, one strong down day would change all that.  I have no idea what happens tomorrow.

The U.S. media is not saying much about what is happening in Europe.  European bank stocks are tanking again and their CDS prices are rising.  Deutsche Bank's stock hit all time lows.  Another German bank Commerzbank announced it was cutting 9000 jobs or about 18% of its workforce.   Germany is the strongest European country and even its banks are in trouble.  This situation looks exactly like U.S. banks in 2008.  A blow up could happen at any time.  I don't know what you do with that information, but at least you will not be surprised if some morning you find out all hell broke out in Europe.

Interesting read.  “Negative Growth” of Real Wages is Normal for Much of the Workforce, and Getting Worse: New York Fed


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