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Monday, April 2, 2018

Daily update 4/2

A big splat (over 2%), but somehow it does not look all that bad on the chart .

SPX broke below the 200 SMA this morning and the algos started selling.  Late in the day buyers showed up causing a significant bounce.  However, SPX closed below the 200 SMA for the first time since 6/27/2016.  That is an unusually long time.  Breadth was -79%.  Widespread selling, but not exactly climactic looking.  Today was the lowest close of the year for SPX, but not for R2000 or COMPX.  R2000 tested below its 200 SMA, but COMPX still has a ways to go.

This is the third time the futures have tested below 2570 this year.  Each time they bounced back that same day and saw some upside follow through.  Will that pattern repeat?

On Friday I wrote "SPX could still make a short term bottom, but the pattern is starting to look more like a consolidation to go lower.  The bulls need to show up and win on Monday."  Obviously the bulls did not show up.  However, there was a significant bounce off the low.  The TRIN closed over 2 which often leads to a bounce the next morning.  I think the bulls still have a chance to form a short term bottom here.  It might not be a lasting one though.  Without the positive divergences usually seen on retest lows in this bull market it is hard to say.  Another rally here that fails will not help the bull cause at all.


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