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Wednesday, April 18, 2018

Daily update 4/18

Pause day.

SPX rallied up to the blue upper channel line and found some resistance.  Breadth was +52%.  It was +65% earlier in the day so there was some selling into strength in the afternoon.  New highs increased again to 148.  New lows also increased to 54.  Not sure why that happened.  It seems odd given the circumstances.

The futures remain outside the upper channel line.  Sometimes they test it from above and bounce.  Other times they come back in and signal a consolidation period.

The green count turned back down.  The market should start working off the overbought condition now.  That does not mean price needs to pullback.  It can do that while moving slightly higher in an extremely bullish market.  The intermediate indicator continued higher.  It will cross 50 within a few days.  That does not mean SPX will make new highs, but it should mean the market is unlikely to roll over quickly and head lower.  That indicator crossed 50 after the double bottom in Oct. 2015.  SPX rallied nicely, but never made a new high before heading lower into early 2016.  We should have a few weeks of rally at the very least.

The all company advance/decline line has already made a new high.  That should be foretelling that SPX will make a new high as well. 

The last two days the bid under the market has returned.  Investors seem to be much more comfortable buying stocks now.  It would probably take a severe news event to change their minds.  Maybe something like the sign a trade war with China is likely.  Barring some shocking news we should see higher prices in the next few weeks.  As I said last night I will be watching for a confirmed break below the 50 DMA to signal a change in the market.


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