If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Monday, October 1, 2018

Daily update 10/1 A Historic Divergence In Stock Market Breadth

Buy the rumor, sell the news on the Canadian trade deal.

SPX stuck its head above the FED reversal day high, but failed to stay there.  Breadth was -57%.  Rather odd given SPX was positive.  New highs were up a bit to 89.  New lows were also up at 149.  That can't be good.

The futures got above the 20 SMA overnight.  They even confirmed a break at the 10:00 bar.  The next bar tested back below the 20, but found enough support to close above it.  In theory this should indicate the futures have started to move up again.  I don't like the look of the ADX indicator.  The +DMI and -DMI lines have that braided look which indicates uncertainty.

The red count actually increased despite the positive day in the index. 

The futures look marginally positive, but the internals today did not back up the positive close.  SPX  broke out over the highs of the last five trading days, but failed to stay there.  That is marginally negative.  R2000 was down 1.39%.  COMPX was slightly negative.  That can't be good.  SPX broke out above the Jan. high on news that a deal with Canada was close.  At times it did not seem it was all that close, but in the end they got it done.  Canada finally moved enough.  The sellers came out today at 10 AM to take advantage of the strength. The selling persisted all afternoon and was particularly noticeable in small caps.  Is that all the selling or is there more to come?  The market internals suggest there is some risk of a pullback, but the selling pressure has been very limited for months.  Will it be any different this time?  A close below the FED day low (2903) could kick start some selling.  The bulls need to get SPX to close above the FED day high (2931).  In between is just noise.

Interesting article on the poor new highs and lows data I have been talking about.  A Historic Divergence In Stock Market Breadth

Even more notable, it brings the total omens triggered over the past year to 44, by far the most in at least 40 years and roughly double the total seen almost 20 years ago. The only thing to conclude from this is that we are currently seeing a historic divergence in equity market breadth, the sort of dispersion that has typically preceded broader market turbulence.

Maybe this is nothing, but the odds another bad bear market is coming are rising.


No comments:


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