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Monday, August 6, 2018

Daily update 8/6 Morgan Stanley warns of possible NASDAQ plunge of 15% or more

Third highest close ever on SPX!

The bulls ran a little further this morning.  The market ran into a little bit of selling in the afternoon, but nothing big.  SPX closed above the 7/25 high.  Only 1/26 and 1/29 closed higher.  Today closed the 1/30 gap down.  Volume was very light and declined from yesterday's light volume.  Breadth was +57%.  New highs were only 95.  New lows were 34.  Not great stats for the 3rd highest close ever.

The futures closed above the upper channel line.  Will they stay there or come right back in?

The green count was up a bit, but remains below 50.  Notice the intermediate indicator has turned down a little bit.  SPX is losing some momentum here.

The bull pressure lines are all positively crossed, but none of them are showing strength.  The short term indicator has been nearly flat since the middle of July.  Not what you want to see in a rising market.

This looks like the typical retest rally destined to fail.  The internals appear to be quite weak.  If SPX intends to break out and go higher it is surely hiding it well.  That does not mean it won't make a new high here.  I just don't think it will stay there long if it does.  The late summer/early fall pullback may play out yet.  I am pretty sure all money managers were blindsided by the Feb. pullback.  I think many have been holding on waiting for the market to get back up here.  I suspect some will want to derisk a bit soon.

Nasdaq could plunge 15% or more as ‘rolling bear market’ begins claiming victims, Morgan Stanley warns


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