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Wednesday, October 5, 2016

Daily update 10/5

Dip buyers and rally sellers in the market.  Which side is the smart money?

SPX is back between the 20 and 50 DMAs.  The breadth was +59%.  That is the weakest breadth for an up day since the 9/9 spike down.  The prior weakest day was +66%.  That may be a sign the dip buyers are getting exhausted, but its hard to say.  Another weak up day and it would be much more likely.  New highs increased to 111.  Not the strongest of attempts by the bulls to save the market.

The futures got back up into the triangle.  A rejection of the lower trend line like that should give some reasonably good odds of a break out over the top line.  However, the futures turned back at the 100 SMA and the bulls just didn't really seem to have much desire.  I don't know if they will be ambitious enough to push price through the upper line or not.  Going back down through the lower trendline again would probably bring out more sellers.

The green count slipped a bit today despite the rally.  The bulls don't seem to be tripping over themselves to buy.

The dip buyers have been doing their job.  However, there is clearly an overhang of supply.  Some people are hitting the bids whenever there is strength to sell into.  Nearly all the upside happens in the first 40 minutes of market action since 9/9.  The market really struggles to gain any altitude after that and most days it makes a low after noon.  That is not normal intraday action in a bull market.  There is clearly a risk of a break down.  Will the bears strike back tomorrow or will the bulls come out to play again?


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