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Thursday, June 1, 2017

Daily update 6/1

Rally chasers showed up.

Not only a new high, but a close on the high of the day.  You don't see that very often.  The volume does not look high enough to be a buying climax.  Breadth was +79%.  That is pretty high for an extended market.  The last few days saw all the strength in the few big cap winners as funds piled in to make themselves look good on the books.  Today money moved to the stocks that have been left behind.  New highs increased to 260.  New lows dropped way down to 21.  That is still higher then normal for a thrust bar at new highs, but much better then they have been lately.

The futures broke out above the upper channel line again.  If they come right back in then a trip to the lower line would be likely.  If they stay out there then the market initiated a new upward thrust.

The green line made a new peak since the last bottom, but remains below overbought levels. 

Today's buying was sparked by the ADP employment report.  That has a notoriously lousy track record of predicting the governments number that comes out tomorrow.  It is really unusual for that number to have much of a reaction.  That suggests people were just looking for a reason to buy.  The question is will they keep on buying now that the VIX is under 10 again.  There is a cushion down to 2400 now should the market pullback here. 

The small caps and financials both had big days.  The longevity of this current rally probably depends on them making further progress on the upside.  The market clearly broadened out today, but was it a one day phenomenon or will it continue.  The only thing I know is that upside progress is very slow when the VIX is under 10.  It is really up to the bulls to keep on buying.


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