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Wednesday, July 18, 2018

Daily update 7/18

A mixed day.

SPX made a new rally high and closed above yesterday's high.  Theoretically that confirms yesterday's break out.  However, SPX was only 1.5 points above the high and COMPX was slightly negative.  Breadth was +52%.  New highs came in at 73.  New lows increased to 41.  We are not seeing much conviction here.  However, this is the longest rally in days since the Feb. low. 

The futures managed to end the day still above the upper channel line.  However, they did not close above the high of the bar that first closed back above the line.  I can't say the rally is really taking off again yet.

At least the green count turned up today.  It remains below 50 though.

The short term bull pressure lines are actually negatively crossed while SPX hit a new rally high.  Another sign the rally lacks oomph.

SPX is close enough to the Jan. top that this constitutes a test of that high.  We may be close enough for that high to act like a magnet, but hard to say.  The internals do not show a lot of enthusiasm.  It might be more of a slow creep higher from here if we keep going.  This is one of those situations that is tough to analyze.  SPX is floating higher on low volume because of a lack of sellers.  If news happens that changes that dynamic with the sellers the market could reverse sharply.  The trouble is we can't know whether a sell catalyst will happen or not.  I heard Kudlow on TV this morning and he seemed to indicate there will be more trade war related news next week.  We are coming up on six months since the SPX high.  A failure here after being this close to that high could cause more selling pressure then we have seen the last few months.  At this point I would think a close back below 2800 could be a warning sign of potential trouble.  That might bring out a few more sellers.  Low volume weak breadth rallies can last a few weeks.  The trouble is they can also reverse sharply without warning. 


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