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Monday, May 1, 2017

Daily update 5/1 Transports pattern repeating?

Another one of those times when the first of the month does the opposite of what the last day of the prior month did.

It was an up day, but not a strong one.  Quite a drop in volume.  Breadth was only +54%.  New highs were up a bit to 176.  However, new lows also increased and came in at 42.

So far the futures have gone sideways so the 20 SMA is catching up to price.  Once that line catches up the futures might launch higher.  Otherwise they risk breaking to the downside.

Despite the up day the green count slipped and the red count increased. 

I haven't shown the 10 DMA breadth and volume chart in a long time.  However, it is kind of interesting.  Notice the breadth lines (the pane just below price) have been pretty strong the entire post election rally.  Now look at the volume lines in the next pane down.  They have been extremely weak since Nov.  That is pretty clear it is not the big boys that have been doing the buying since Dec.  This looks like it is mostly retail investor money since then.  That goes along with Charles Swab saying they had the most new retail brokerage accounts opened up since 2000 during Q1.  This is a good indication this is likely the last leg up in this bull market. 

The internals today were not good.  If we were in a downtrend I would call it a dead cat bounce.  Since we are consolidating at the highs I will just say it was a lack of buying enthusiasm.  Between the last two trading days the volume was clearly with the sellers.  That probably increases the risk a bit that the bears will end up winning.  I will be keying on what the futures do with that 20 SMA.  Do they form a bottom and launch or end up breaking down.  The bulls can still save the day.  So far earnings have not been enough apparently.  I don't know if AAPL tomorrow night can be the match that lights the fire or not.  I have noticed a few times in the past where the market held up until AAPL reported and then sold off.  Sometimes waiting is the best course of action.  This looks like one of those times.  There are enough negatives around that the market might not break out and move higher.  Then again something can come along and spark another wave of buying.  Patience.

I have mentioned my concerns with the transports.   This is a nice longer term look at them.



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