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Wednesday, November 15, 2017

Daily update 11/15

Global de-risking continued again.

SPX closed below the key 2566 level, but.  I will get to the but in a little bit.  Breadth was -62%/  New highs contracted to 78.  New lows were higher once again to 142.  SPX closed below the 20 SMA for the first time since late Aug.  That is an unusually long time.  No confirmation of a break yet.

The futures closed below the lower channel line this morning, but came right back in and closed back above it.  That usually means a trip to the upper channel line is likely.

The red count crossed over the green line, but is still below 50.

In Daily update 11/13 I wrote " I am still watching that 11/9 2566 low as a possible tipping point should SPX close below that.  What we might tip into should that occur is unknown."  Well we finally closed below that level, but there are extenuating circumstances.  When SPX fell below 2566 right after the open instead of bringing out sellers it brought out dip buyers.  Only a late days sell off took it back below.  Those late day moves are not particularly reliable for future direction.  The NYSE ticks spent most of the day in positive territory today for the first time in this little pullback.  Dip buyers were more enthusiastic.  On top of that HYG sold off, but reversed to close slightly positive.  A lot of the time the first close below the 20 DMA in a long time is bought.  Will this be one of those times?  It does not look like U.S. investors got the memo the rest of the world got about taking some money off the table.  Unless the market collapses from overnight news tomorrow I think there is a reasonable chance the bulls start a bounce from here to retest the high.  That would be the normal thing for the futures to do based on their action today.  Should the sellers actually decide to show up the 50 DMA (2542) is the next support level down.


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