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Friday, November 18, 2016

Daily update 11/18

Rotation winding down.

SPX is still hanging out below the uptrend line.  We opened up a little bit this morning and the sellers went right to work.  However, they brought a pretty small hammer today.  Breadth was only slightly negative.  New highs were down a bit to 149.  New lows were up a bit to 43.  The number of  new lows clearly go up and down with bonds.  Today's high was fractionally below the high close.

The futures stayed within the rising wedge pattern mentioned yesterday.  Going to be impossible to stay there much longer. 

The green count slipped below 50 today.  Oddly the red count plunged as well.  Maybe there was a little bit of dip buying in some stocks that had been down recently. 

Today was day 10 off the low.  I marked day 10 off the brexit low which was the peak of the breadth indicators in that rally.  As you can plainly see this launch is not nearly as strong as that one was.  Both the MCO and 10 DMA lines are well below where they were in that rally.  This appears to be half-hearted to me.

I find this situation totally amazing.  The day before the election Trump would kill the economy if he got elected.  Since the market did not crash after the election the rhetoric coming out of Wall Street now is that he will be a great growth president.  I actually heard a guy talk about how it reminded him on the floor of Reagan coming in.  Seriously?  The talk is bordering on euphoria while the internals are really weak.  I heard Pisani talking about record weekly inflows into ETFs.  That would explain the weak internals.  The money flow is mostly into index ETFs.  Some money managers make use of ETFs, but I would be willing to bet there was a large influx of retail investor money on this rally.  This seems like the perfect environment for this to be a final blow off top.  I guess we will see.

Have a great weekend.


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