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Thursday, July 12, 2018

Daily update 7/12

Bulls strike back.

SPX closed at a slight new rally high making up yesterday's losses and then some.  It got within 1 point intraday of the key 2800 level everybody seems to be watching.  Breadth was only +57% and was even negative for a while mid morning.  This rally was pretty narrow given the magnitude of the increase today.  NDX was even up 1.69% on the strength of big cap tech.  New highs were up a good bit from yesterday, but were only 90.  New lows were 38.

The futures held support above the upper channel line and popped to a slight new high.  Will the bulls keep pushing or will the sellers show up again?

The green count moved back to overbought with today's strength.

SPX is short term overbought just below a key level everybody is watching.  They were sure happy late in the day on CNBC.  Maybe a little too happy.  With today's rally being so narrow I don't know if SPX is going to blast right through 2800.  In a truly strong market the short term overbought condition would not be a problem.  Since the Feb. sell off the market has struggled when overbought rather then keep chugging along like years past.  I don't see anything that indicates things are definitely different this time.  It may be different now, but I can't tell.

The market can be fickle in relation to news events.  Sometimes the market totally reverse a news event only to reverse again in the direction of the news.  It won't surprise me if that happens here due today's action.  It felt like a rotation day as money moved into big cap tech stocks.  I guess the thinking is they will be less affected by a trade war.  If that was the case the market might be taking trade war fear more serious then it appeared today.  We will just have to see what happens over the next few days.  Maybe the bulls will just keep on buying.


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