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Tuesday, February 26, 2019

Daily update 2/26 Q1 2019 earnings expectations turned negative

Bulls and bears both active today.

There was a little more selling today than it might have looked.  Breadth was -57%.  New highs dropped way down to 75.  New lows were stable at 10.  Today keeps the possibility of yesterday being a short term top alive.

The futures are still hanging above the 20 SMA. 

The green count dropped below 50, but remains above the red line.  The last two times the green count dropped below 50 the buyers showed up.  Not sure that will happen this time though.

There were some dip buyers and rally sellers today.  The last two days there was some selling into the close which has been very rare on this rally.  There appears to be significant resistance here.  We will have to wait and see if that unleashes any significant selling pressure.

I read that SPX short interest is the lowest it has been since 2007.  That suggests the fuel from short covering is probably exhausted.  High short interest tends to cushion down moves as the shorts provide some buying when they cover.  Many bottoms are actually made when a large number of shorts take profits.  With SPX at a lower high I think this stat is a bad thing.

Interesting chart on earnings expectations.

Estimates for SPX fell 5.7% since the end of last year and are now negative.  Fundamentals are not looking very good at the moment.


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