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Wednesday, May 30, 2018

Daily update 5/30

I guess the VIX spike really brought out the buyers.


The market gapped up and kept on going.  SPX closed back above the 100 SMA.  Breadth was +76%.  New highs spiked up to 151.  New lows dropped back to 37.


The futures rallied back above all the moving averages.  It seemed to find resistance at the top red line. 


SPX closed above where it was the day before yesterday's sell off, but the green count is still just below the red line.  Both lines are below 50 so this is a neutral condition.

This was a good day for bulls.  However, they need to keep the pressure on to get an upside break out of this consolidation pattern.  A fake out break down as we just had yesterday often leads to a break out in the other direction.  However, there is no guarantee that such a break out won't fail.  Failures in both directions sometimes happen.  The action today says the market was not ready to go down yet.  I don't think we can assume that means it is ready to go up.  The bulls still need to prove themselves.  It is possible sellers will show up again when SPX gets near the recent highs.  This is the problem caused by the lack of a good selling climax.  Some day the market will decide which way it wants to go for more then a day or two.

Bob

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