Yesterday we started out weak, but failed to break down. Today we started out strong, but failed to rally. Well at least in SPX. Most indexes were positive today. The transports were even up .6%. The breadth was slightly negative again. New highs were stable at 86.
The futures touched the 200 SMA again, but so far are holding above it. This is clearly a key line in the sand.
What a strange day. Oil tanked after the inventory data came out and I suspect that was part of the sell off in SPX. There was a build in gasoline inventories, but I don't have a clue why that caused such a negative reaction. I have seen so many days when the inventory data caused a spike down in the price of oil only to see the move reversed and send oil to a new high that day. I don't know if there will be any downside follow through on oil or not. It might have been a one day wonder on the downside. As long as the futures are holding that key 200 SMA there is still the potential for a bounce.
It is coming up on one month since the 3/21 smack down. The dip buyers have been busy loading up this entire time. A break down here is likely to bring on more urgency in the selling. I don't have any idea what the odds of that happening are. I think the bulls need to show up tomorrow to get the market out of trouble. The futures have held support for several days, but there is a limit how often a support line can be touched without breaking. I think we must be getting pretty close to that limit.
Bob
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