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Monday, July 17, 2017

Daily update 7/17 Institutional investors low on cash

No follow through today.

Another very narrow range day on light volume.  Breadth was +52%.  New highs came in at 151.  Once again light at new highs.  New lows picked up a bit to 14.  They are normally under 10 when in rally mode at new highs.  The bulls were not tripping over themselves to buy the break out today.

The futures are still holding outside the upper channel line.

The green count slipped slightly today. 

The bulls were not willing to buy today with the VIX in the 9s.  Not surprising by any means.  The real question is whether selling pressure picks up or not.  Market internals are all positive at the moment.  In the absence of sellers the market could continue higher in a slow choppy fashion.  This last new high looks pretty flimsy to me, but the rally could still get some legs.  I think the clue on whether the sellers have more work to do will be in FANG stocks which would be reflected in QQQ. 

Take a look at this chart.

The red circles indicate prior periods when cash levels dropped to 3%.  Notice the dates and you will find corrective periods periods in SPX.  The flash crash followed the April 2010 reading.  The near 20% mini crash followed the July 2011 reading.  The June 2015 period happened right after the May high in SPX that lasted over a year.  Not to mention the rather abrupt move down in Aug. that year.  We are currently at the lowest cash level in this entire bull market.  The market appears to be running low on fuel.


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