SPX dipped below the Jan. high twice, but found buyers each time. The second time formed a double bottom and led to a decent afternoon rally. Breadth was -57%. New highs were 95 and new lows were 102. The increase in new lows this close to the high is a little odd.
The futures tested below the 50 SMA, but bounced back above it. They confirmed the break of the 20 SMA. That means the bulls have to work just a bit harder to get control of the micro trend back.
The green count was stable today and is still above the red line.
The defensive rotation continues to play out. That is not what you want to see when SPX just broke out to a new high after such a long correction. It looks more and more likely this will be a failed new high. Everybody was on TV telling us not to worry about the pullback in tech. We have seen this before and they always bounce back. While that has been true they must have forgotten that past performance is not necessarily indicative of future results. SPX just made a new high last month. If everything was just fine they should not be selling tech here. They have piled into tech after every correction in this bull market when SPX made a new high. This time is different so far.
It will be interesting to see if today's hold of the Jan. high brings out enthusiastic buyers tomorrow. A failure of the bulls to light a fire under this market soon will lead to a failed break out. If that happens people might all of a sudden start talking more about what is going on around the world. That could lead to a pickup in selling pressure. Remember this rally happened largely because of a lack of selling pressure. It is not clear how much buying power is sitting around waiting for a pullback.
Bob
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