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Monday, April 30, 2018

Daily update 4/30

Key reversal day down.

After a gap up the sellers proceeded to rule the day.  SPX closed back below the 20 SMA and near the low of the day.  Breadth was -60%.  New highs were stable at 71.  New lows were also stable at 48.  Whatever happens the last day of the month is often reversed on the next trading day.  In this case that next day is also the day before a FED meeting which for a number of years has gapped up.  When SPX closes so near the low a gap up the next morning usually tests that low.  Key reversal days on 2/27 and 3/13 saw downside follow through the next day and beyond.  Resistance at last year's close held again today.  I wonder if SPX is tracing a big triangle pattern shown by the yellow lines. 

The futures made a new bounce high overnight.  However, they turned down shortly after the open and reversed back below both the 20 and 50 SMAs.

The red count turned back up.  It remains above the green line and just a tad below 50.

Earnings have been great.  NK is talking peace.  Despite all the great news the market can't hang on to a rally.  That is a pretty good sign the correction has not completed yet.  The overhang of supply is still lurking out there.  The dip buyers can't get any traction.  I did not see any particular reason for today's sell off.  That usually is not good.  It is rare to sell off through a FED meeting, but anything can happen.  Maybe this is one of those times if the market does not bounce tomorrow.


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