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Monday, April 3, 2017

Daily update 4/3 Corporate profits

Both buyers and sellers took a turn today.

The market headed south at the open.  After the European close stocks rallied the rest of the day.  That suggests today's selling came mostly from overseas.  Breadth came in at -55%.  New highs were stable again at 91.  SPX remains below the 20 SMA.

The futures have been below the 100 SMA long enough for the 50 to cross below also.  The market is clearly losing steam and threatening to roll over.

The green count slipped a bit more today, but remains above the red line.  The bulls are losing their grip a bit.

Without the selling pressure from Europe the market might have reversed yesterday's action.  I am not sure what sparked the selling from abroad.  I am starting to hear talk about the difference between the soft and hard economic data.  People are starting to realize what I have been saying.  The real economy is not matching up to the survey expectations.  The new car sales data was absolutely abysmal today.  Even with the biggest incentives since 2009 car buying slowed way down.  With inventories already high there will very likely be production cuts coming up.  That would hurt the hard data even more.

It looks like the market may be rolling over, but the bears need to see more downside follow through.  The bulls could save the day again, but they probably need to do it quickly. 

Here is an interesting chart from an article sent in by a friend (tnx Manny).   Last Two Times After Our Dear Government Reported Data Like This, Stocks Crashed

This is a broad measure of profits across all U.S. companies.  This data backs up the idea the economy is muddling along.  Historically there have been instances where profits contracted for a period of time and the U.S. did not fall into recession.  However, more often a recession follows.


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