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Monday, April 23, 2018

Daily update 4/23

Lets call it a draw.

SPX tested Friday's low and found some buyers.  It even got back to slightly positive.  Breadth was -53%.  New highs were stable at 57.  New lows were also stable at 106.  Volume was rather light.  The dip buyers held off the bears so there was no confirmation of Friday's break of the 50 SMA.

The futures tested the lower channel line and bounced.  Still no confirmed break of the 20 SMA.  Usually a pattern like this ends up bouncing with the futures testing above the 20 SMA.

The green count turned up despite SPX being flat.  That is a good sign especially if there is upside follow through tomorrow. 

I mentioned XLF as a possible problem in the bullish case.  The SOX might be an even bigger problem.  It has fallen out of bed the last few days.  I think it will be hard for SPX to make new highs if the SOX does not get turned around.  This is definitely something to keep an eye on.

The 2660 area on SPX has held as support the last two days.  With SPX still above the 20 DMA the rally could resume here.  A close below 2660 would confirm the break below the 50 DMA. There are a lot of earnings announcements scheduled this week.  Maybe that will inspire a little more buying.  If earnings can't drive this market to new highs what will?  So far this earnings season the overall action has not really been all that inspiring.  The market still seems to be seeing some serious de-risking going on.  The advance/decline suggests the indexes should recover and make new highs.  I think these sellers are going to have to back off considerably.  I don't know if that will happen or not. 


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