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Friday, August 24, 2018

Daily update 8/24 The stock market’s latest sell signal has happened only 5 other times since 1895

SPX makes a new high close.  Let the celebration begin.

SPX closed less then 2 points above the Jan. high.  Not exactly a clear sign we are going higher.  Breadth was +64%.  New highs were only 114 which was less then the 162 on 8/21.  New lows were stable at 36. 

The futures got above the 8/21 high mid morning, but came nearly to a stop.  They only managed to gain 3.5 points the rest of the day.

The green count recrossed 50, but is below where it was on 8/21.  Not exactly clear the bulls will keep on buying.

The Dow is still quite a ways below its Jan. high.  I think retail investors still pay more attention to that index then SPX.  I don't know that the new high on SPX will generate much excitement in the retail crowd.   

The market has looked for months like it was hobbling back to the high.  That makes this rally a good candidate to fail the retest.  SPX made the new high close cementing this bull market as the longest in history.  The question is how much more it has in it for the near term.  The first order of business is to get a close above today's high to confirm the break out.  The VIX divergence is still lingering out there.  It did not close below yesterday's low.  I don't see any sign the divergence is going to resolve with an SPX pop.  Will the new high excite the retail crowd?  We know much of the professional crowd is taking vacation.  Will buyers step up and chase price higher?  There was very little buying interest today.  Just enough to hold the highs into the close. 

This last leg up started when news came out that the U.S. and China were going to talk trade again.  I believe that sparked the wave of buying that took SPX to this new high.  Those talks ended with nothing new.  Today I heard some rumblings that China was saying there might not be any more talks until after the election.  My guess is that will be the case.  I suspect China is hearing about the so called blue wave the democrats keep hyping.  China is likely hoping that happens which would serve to weaken Trump's bargaining position.  That headline did not take the market down, but there was clearly a lack of buying interest at the high today.  We also have headlines about immunity being given to some people regarding Trump's campaign.  That might have been another reason for the lack of enthusiasm.  I think next week will be interesting because people will have to make a decision whether to hold em or fold em.  Given today's headlines I wonder if there will be enough buying enthusiasm to push SPX significantly higher.  I guess we will find out.

This is an interesting article.  The sell signal does not mean sell today, but after the prior five signals a 50% or more crash happened.  The stock market’s latest sell signal has happened only 5 other times since 1895 

I must commend this pilot for a great balancing act.

Have a great weekend.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.