This is the lowest close for SPX since the 3/1 high, but it is still above the 3/27 intraday low. The blue bar indicates the close was below the lower Bollinger band so price is a bit extended short term. That can lead to acceleration in the direction of the trend or a reversal. Breadth was -68%. New highs dipped down to 52.
The futures hit the 200 SMA which might provide support.
The red count picked up today and crossed 50. However, it is well below oversold levels.
SPX is testing the 3/27 low. The VIX is still less then 16. The best bottoms have come with a VIX over 20. If SPX were to bottom here it might be tough to get much higher then the 3/1 high. Despite beats by JPM and C the financials ended up in the red with SPX. That is not a very bullish sign since the group was already correcting. Clearly the last two days have seen lowered buying enthusiasm levels. It could be geopolitics as bombs are flying. That might not clear up right away and could get much worse from here. On the surface the lack of real selling on this decline would appear to be bullish long term. Sometimes it works out that way and sometimes it doesn't. Some declines in bear markets start out that way as well. I am not sure what exactly is going on. We will have to wait and see how this test of the 3/27 low plays out. There could be a lot of stops below that low if the market probes down there.
Breadth was very good and stock participation was fine going into the top. However, there are a few things that bother me. The transports failed to make a new with the Dow at the very end. On this decline they have fallen well back below their late 2014 high they broke out above during the post election rally. If the economy was truly accelerating I don't think that should have happened. That makes sense with the data I have been seeing that is not showing any acceleration to this point. The small cap stocks are also a bit bothersome. While they are still above their 2015 high, they are well below the 12/9 high. After the initial spurt off the Nov. low they have clearly lagged behind. The financials are not acting all that well either. XLF is well below its 12/8 high. Recently iron ore prices are crashing. That was how the big commodity down move of a few years ago got started. This could be a sign the global economy is starting to slow again and could be a negative for basic materials stocks. I know from studying economic history that sometimes after a period of weakness there is one last spurt of strength that rolls over into recession. It is possible we are seeing that last spurt. I can see how that 3/1 gap up could be an exhaustion gap that ended the bull market. However, there is just no way to know that at this point. I can't rule out a spurt up to new highs and beyond. Quite the dilemma.
Today turned the short term trends down across the board.
More technology for country folks.
Have a great long weekend as the market is closed tomorrow.
Bob
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