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Thursday, April 12, 2018

Daily update 4/12 Global growth slowing

A new April high close.

SPX hit the downtrend line connecting the lower peak and pulled back.  Breadth was barely positive.  Very odd considering SPX was up .8%.  It was a big cap day.  New highs were stable at 51.  New lows increased a bit to 41.  That is a bit odd since the day started with a gap up and never traded in the red all day.

The futures finally closed above the lower resistance line.  However, they stopped at the 4/5 high.  They turned back sharply losing 10 points in the last 30 minutes.  Breaking the lower line might increase selling pressure.

Despite the higher closes on the indexes the green count actually fell.  Combined with the weak breadth it is hard to have a lot of confidence in this rally.  Maybe the financials reporting in the morning will rev up the bulls.

The last few days there have been sizable sell programs intraday.  The dip buyers rushed in to scoop up the bargains.  I find it a bit odd though to see the amount of selling here.  SPX is just barely above the 200 and trying to form a bottom.  Despite the outlook for great earnings somebody is selling a lot of stock.  There were four separate sell offs today of 10+ points.  Not everybody is in agreement the market is headed higher.  I am guessing the increase in volatility has unnerved some investors enough to lower their risk levels.  We can't know how long this will last, but the market is going to struggle until it stops.  With SPX near the top of the recent trading range the question is will it break out or turn back again. The bulls still need to prove themselves.  I don't see a technical green light yet.

Late last fall ECRI said their long lead indicators had rolled over and they were expecting global growth to slow down some.  That appears to be happening.

Europe and Japan are showing noticeable slowing.  The U.S. might be slowing some, but not significantly yet.  I have not heard anything from ECRI that their long lead indexes have turned up yet.  They announced that back in 2016 for everybody to hear before the global economy turned up strongly.  I guess they will do that again.  At this point I would say we could still see further slowing.  Slowing is not the same as going into a recession.  At this point it is just a growth slowdown.


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