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Monday, April 9, 2018

Daily update 4/9 Mind The Gap, and Other Non-Confirmations of a Low


A massive rally broke out after Larry Kudlow was interviewed on CNBC this morning.  SPX tested up into the resistance zone and breadth was +71%.  Then all heck broke out.  SPY, QQQ, and IWM all closed back below their opens.  Breadth ended slightly negative.  Late in the day I heard about the FBI raiding the office of Trump's lawyer.  I am not sure when that news broke or if it was the catalyst for the sell off.  New highs were 22.  New lows came in at 46.  No sign yet the market is stabilizing that I can see.

The futures climbed to near the top of the last big down bar marked by the red resistance line.  Price turned down sharply and proceeded to fall the rest of the day.  At the end of the day the futures were back below the 20 SMA.

The red count shot up over 50 despite SPX being positive for the day.  I was surprised to see it had risen that much. 

This is one touchy market.  The bulls really blew a chance to take control.  Intraday reversals to the downside as big as we had this afternoon are pretty rare.  SPX is certainly being whipped around by headlines.  That is not good for investors.  I even heard Bob Pisani say some people are talking about the market being uninvestable.  I think it is safe to say we have a market that almost everybody believes is over valued that is now somewhat unstable.  I can understand the nervousness among money managers.  The longer this consolidation goes on the more nervous they might get.  That probably means the odds of an upside resolution are going down with each passing day.  It may already be too late.  A downside break targets a move down to about 2450 on SPX.

I mentioned how my intermediate indicator was not showing a positive divergence on this retest of the low as it has in the past.  Here is an interesting look at some other measures of market internals.
Mind The Gap, and Other Non-Confirmations of a Low


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