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Monday, August 7, 2017

Daily update 8/7 Wall Street Cancels the Surprise Parties

It did it again.

SPX made a new closing on negative breadth and the down volume larger then the up volume.  Another distribution day.  New highs were down from yesterday a bit to 112.  Pitiful on a day with a new high close.  New lows were 45.  Very elevated on a new high.  Internals stunk.

The morning selling pressure we have been seeing was absent today.  I don't know if that means it is over or if it was just a break.  It is possible the reversal in the dollar on Friday changed everything.  The futures did not get above their 7/27 high yet.

Oddly the red and green count are exactly the same.  Both are well below 50.  Not great with SPX at new highs.

Today's new high in SPX did not see a new high in the common stock only advance/decline line.  I mentioned before this was the only market internal that was keeping up with the new highs.  This is a rather small negative divergence.  It may turn out to be unimportant, but it could be a warning sign. 

On a closing basis SPX has managed to gain 3 points over the last eight trading sessions.  A whopping 7 points since 7/19.  I have talked about the slow creep pattern many times in the blog.  I think I will call this one the ultra slow creep pattern.  Meanwhile everyday I hear people on TV talking about how wonderful everything in.  Maybe the market has already priced in the wonderfulness of it all.  The pundits tell us it is safe to buy because things are good.  Any true market historian would tell you things are normally good at tops and bad at bottoms.  Tops usually happen when things are as good as they are going to get and about to get worse.  The problem is knowing when things are about to get worse.  Tall order.  The action in the transports, auto sales, and to some extent real estate suggest things could be about to get worse.  Leading indexes are still pointing to economic growth through the rest of the year.  That does not mean that growth won't slow down from its already anemic pace though.  It should mean we are unlikely to enter recession before 2018.  Just keep in mind it is not uncommon for bubbles to pop well ahead of an economic recession. 

Interesting article on the lack of upside in companies beating.  Wall Street Cancels the Surprise Parties


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