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Monday, July 10, 2017

Daily update 7/10

Mixed day.

SPX rallied up to the 20 SMA and stopped.  It sold off going into the close.  While the volume was slightly higher then yesterday, there have only been a few days all year with lighter volume.  No conviction here by the bulls.  Breadth was barely positive.  New highs increased a bit to 108.  New lows stayed elevated at 48.  Today was a reverse rotation back to tech.  While rotation is normal and healthy in a bull market it is different when that rotation only lasts a few days.  We saw a clear rotation from tech into transports, financials, and small caps for several days.  Today was opposite as tech was up and those other sectors were all down.  Rapid rotations are more often indicative of a change of direction. 

The futures tested above the 100 SMA again, but failed to close there.  Still resistance for the moment.

The red and green counts came together again.  Still indecision here.

QQQ almost touched its 50 SMA.  Quite the volume drop today.  This does not look like a lot of conviction on the part of the buyers.

I am leaning toward the last two days being a dead cat bounce.  The volume was exceptionally light and the internals today were really weak.  The futures need to get a break out above their 100 SMA to give me some confidence the bulls are back in charge.  Should the market roll over and SPX breaks its 50 DMA 2390 is probably the first good support level.


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