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Tuesday, December 11, 2018

Daily update 12/11

The bulls showed up overnight, but the bears showed up after the open.

The selling took SPX well below yesterday's open.  A ferocious rally broke out between 2:15 and 3:15.  However, sellers showed up again going into the close.  Breadth was -53%.  New highs were up a bit to 35.  New lows dropped considerably to 276.  The bulls needed to see a close above yesterday's high to help form the bottom.  That did not happen and now the bulls need to get a close above today's high.  Tomorrow's FED announcement and market reaction will be interesting.

The futures are in limbo here.  They bounced from yesterday's oversold condition, but have not done enough to get bullish yet. 

The red count dipped only slightly and remains well above 50.

Has the market changed?  Rebounds from retests of lows in this bull market have always seen follow through buying the next day.  That did not happen today.  I can understand people not wanting to chase the gap up.  Often on an open like that the buyers come back when SPX gets back to the break even point.  That also did not happen.  I don't know if the afternoon rally was a news event or not.  I did not see a particular headline that would drive it.  It only lasted an hour and did not hold all the way to the close.  There just seems to be a never ending supply of stock for sell.  That goes along with these rebound type bottoms we keep seeing.  We are not getting that good climax kind of bottom that might indicate the selling is done.  Will we still get a short term bottom and bounce here?  That could still happen.  Historically the second half of the month is much stronger then the first half. I don't think a year end bounce will lead to new highs unless some real strength comes in though.  I think there is still too much up in the air with China for money managers to commit a lot of money.  That may be a problem in Jan. if there are many investors that have been waiting until next year to sell for tax purposes.  If SPX heads down through yesterday's low there is potential support at the 4/2 low (2553).  Below that would be the Feb. low (2532).   Below that we probably get a mini crash.  If SPX can stay above yesterday's low on a closing basis for another couple of days it might embolden some buyers.


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