SPX tested yesterday's low this afternoon and managed to hold it. Breadth was -71%. That was considerably more negative then it was positive yesterday. New highs dropped way down to 118. That is down 221 from yesterday. You don't see that very often. Pretty poor response to yesterday's strength.
The futures broke out of the channel yesterday, but came right back in today. That often leads to a trip to the lower channel line. You can see that happened back in late Jan.
The green count fell back below 50. Not exactly the most bullish response to yesterday's strength.
I think today's action clearly indicates the possibility yesterday was an exhaustion gap. However, the market may still find support at yesterday's low. Further weakness in the days ahead would lend credence to the idea of an exhaustion gap.
The last couple of days the odds of a FED rate hike have shot up after some FED speaking engagements. Up until then the market was thinking it would be June before another hike. That could be the reason today was so weak. The market needs to reprice that idea, but I can't really say exactly what that means.
Bob
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