SPX closed at a new rally high. Breadth was +55%. New highs dropped way down to 112. New lows also dropped considerably to 23. SPX is just 7 points below the highest close (2786) since the Feb. sell off. That could provide some resistance.
The futures dropped inside the upper channel line this morning, but recovered. This keeps the rally alive for now, but there is clearly a loss of momentum.
The green count has reached overbought levels. During this correction the rallies have ended within a few days of becoming overbought and saw significant pullbacks. Will it be different this time?
SPX ended in the green, but QQQ was flat after opening lower. Dip buyers came in today, but not in enough numbers to say yesterday was meaningless. This is an important juncture for the market and it might take a few days to sort out. If SPX falters around here we could have a wider version of the double top lower high pattern. While the U.S. economy is doing fine there are issues with Europe slowing some and distress in some emerging market economies. I am seeing lots of talk of dollar funding issues. That should not surprise anybody with the FED destroying dollars every month. If the market ends up topping around here it is likely to be in response to global conditions. With the global economy so integrated problems cans easily spread. Be vigilant. SPX needs to get to new highs and stay there.
Have a great weekend.
Bob
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