Despite being an inside day SPX closed at a new high. That is one extended market. A lot of short term tops happen on option expiration week. Breadth was -53%. That is negative breadth two days in a row at the highs. That looks like a tired market. New highs dropped way down to 116. That is the lowest they have been since 2/8 which was the day before this last leg up took off.
The futures came in contact with the upper channel line and bounced. If this current leg up has more to go it should keep going from here. Should the futures get a confirmed close back inside the channel then odds favor the market being in consolidation mode.
The green count fell a bit more today. It appears likely we have passed peak momentum, but there could still be price appreciation.
This is quite the interesting situation. To listen to people talk you would think the economy was flying along. The current GDP reading for last year is +1.6%. That is hardly flying along. It is way too early to tell what this year will bring, but there are some headwinds. Rates are higher, the dollar is higher, defaults are rising and credit is tightening. I am still struggling to understand why the leading economic indicators are showing so much strength since the Feb. 2016 low that has not translated into actual growth. Inflation on the other hand has picked up considerably around the world. I see anecdotal evidence of weakness rather then strength. I actually heard a tire commercial the other day on the radio saying they would finance the purchase of tires. I am pretty sure I have never heard of such a thing in my entire life. Is that something you would see in a strong economy? Confusing.
The week after Feb. option expiration is noted from some weakness. A pullback next week would be normal especially as tired as the market looks.
Even in this busy world we all need to make time to exercise. If a busy polar bear can do it shouldn't we humans be able to?
Have a great long weekend.
Bob
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