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

Tuesday, April 30, 2019

Daily update 4/30

The pension fund rebalancing found enough buyers to absorb the selling.

After an early morning sell off caused by GOOG's earnings miss SPX recovered to close in the green.  Breadth was +52%.  New highs spiked up to 190 which was the highest number since Jan. 2018.  New lows doubled to 31.  The volume was relatively high so there probably was some rebalancing going on.  No problem though.

The futures popped after the close.  I would guess that would be on AAPL's earnings as it is up 5% after hours.  If they are still there in the morning that would put SPX at a new high.

The green count recrossed above 50.  It remains well below overbought levels so there is some room to keep going.

SPX keeps marching towards 3000.  The global economic data continues to be poor.  Data from China today was worse than expected, but nobody cared.   All bad news is being ignored.  The Chicago PMI was way worse than expected today.  That made sense as it is highly reactive to the auto sector.  The recent GDP report show a lot of the unexpected strength was from a big build in automobiles.  That could lead to some slow down in production over the next few months.  Whether that matters or not I do not know. 

Technically the breadth data is strong and new highs are good.  The only question marks are from the other indexes.  The industrials and transports both need to make new highs.  Until that happens the possibility this is just a retest of prior peaks remains alive.  It would be good if R2000 and XLF continued higher as well. 


Monday, April 29, 2019

Daily update 4/29

Break out!

Today's three point gain was enough to make a new all time high.  Volume was light.  Breadth was +56%.  There was a pullback late in the day that sent SPX down six points from the intraday high.  New highs were 138.  New lows dropped back to 15.  Not the strongest of break outs.  We will have to see if there is any follow through tomorrow.

The futures keep finding support at the 20 SMA.  Upside progress is slow.

The green count slipped a bit today.  It remains above the red line, but below 50. 

SPX broke out to a new high, but it did not cause a flurry of buying.  On the plus side, IWM and XLF were up nicely.  Oh the downside the industrials were flat and the transports were notably down.  The market continues to look tired, but refuses to pullback.  I don't know if that will change now that SPX has made a new high or not.  Will they sell in May or keep on buying? 

I have noticed the last day of the month sometimes has sizable moves in the last hour.  I recently heard that some pension fund rebalance monthly instead of quarterly.  I am guessing those moves might come from rebalancing.  In April SPX was up and TLT was down.  I wonder if that will cause some rebalancing from stocks to bonds tomorrow.  That would manifest with a late day sell off in stocks.


Friday, April 26, 2019

Daily update 4/26

A better than expected GDP report brought out some buyers after the initial opening sell off.

SPX made a new high close, but it is still slightly below the intraday high from last year.  Breadth was +64%.  New highs picked up to 121.  New lows slipped to 29.

The futures closed slightly below the high from 4/23.  I would say they could still be consolidating despite the new high close.

The green count recrossed the red line.  Will the buyers keep on going next week?

Companies that have missed earnings have been really pummeled.  Some beats have been well rewarded, but not all.  Many that missed have blamed China.  Other companies have said China is good.  The Chinese stock market was down big this week I presume because the leadership said there was no more stimulus planned for now.  The better than expected U.S. GDP might be viewed by Trump as leverage to be tough in negotiations.  I still have no idea how that will all work out.

The dip buyers rush in on every little dip in price.  There has really been no selling pressure to speak of on this rally.  Until that changes there is not much to talk about.

Have a great weekend.


Thursday, April 25, 2019

Daily update 4/25

A little selling and a little buying.

SPX tested below yesterday's low, but the dip buyers rushed in.  However, small caps were hit pretty hard as IWM was down .8%.  Breadth was -61%.  New highs dropped way down to 68.  The more interesting number was new lows popping up to 42.  That is unusual at the highs like this. 

The futures tested the 20 SMA, but held for now. 

The red crossed slightly above the green line.  Is this going to be another bounce cross as buyers pile in again?  That is kind of hard to say with SPX right at the old highs.  It could be a sign the market is tired and in need of a pullback.  We will have to wait and see which it is.

South Korea announced their Q1 GDP came in at -.3% (expectations were for +.3%).  That was the first negative print since Q4 2008.  Weakness in exports especially semiconductors was responsible.  That is rather interesting since the SOX was bid up sharply to a new high over the last few weeks.  The SOX ended up -1.6%.  Was this a one day wonder for the SOX?  Will people that have been relentlessly buying the semi stocks on 5G hype question those purchases? 

The market internals continue to weaken a little bit.  It would make sense to have a pullback here because of the steepness of the rally.  However, we know the market rarely does the sensible thing.  I would be remiss if I did not mention the possibility of a very big triple top going on here.  SPX is not very far above the Jan. 2018 high.  It is important for both the industrials and transports to make new highs.  Until then there is considerable risk the global economic data continues to disappoint and eventually breaks the rally.


Wednesday, April 24, 2019

Daily update 4/24

Pause day.

SPX got fractionally above yesterday's high, but the bulls did not keep pushing.  Breadth was slightly negative.  New highs were stable at 131.  New lows picked up slightly to 26.  Nothing new here.

The futures are not telling us much either.

The green count was up a tad.  It remains below 50, but above the red line.  Pretty non committal

The markets ignored worse than expected business confidence data from Germany today.  It is not clear to me if the global data is going to show the turn around so many people expect or not.  I heard more talk of a melt up.  I find that kind of curious since the market already melted up to get here.  It is pretty hard to imagine the market just keeps going without some kind of consolidation or pullback.  I also question whether the market would melt up until we can see the global economic data has turned the corner.  The fate of the market from here could rest upon what happens with the global economy.  I heard that the Chinese government has said they have no more plans for stimulus.  I guess that means they believe the worst is over for their economy for now.  That would explain why they seem to have backed off on what they were agreeing to in the trade talks.  Whether they end up making a deal remains to be seen.  That probably would not matter if the global economy actually picked up speed again.  I think some patience is needed here.


Tuesday, April 23, 2019

Daily update 4/23

SPX has arrived.

SPX made a new all time high (ATH) close by 3 points.  Breadth was +72%.  New highs were 133.  New lows dropped to 20.  That is actually a little elevated for a  new high.  They are usually single digits.  So far I have been unable to find a V bottom from a near 20% drop straight up to new highs like this.  I think this is unprecedented.

The futures finally made the bounce off the 20 SMA.  It just took a good batch of earnings reports.

This next chart made me do a double take and I even made it recalculate to make sure it was correct.

Despite today's thrust the green count actually fell.  I did not expect that.  Time will tell if it means something.

Bob Pisani was interesting today.  Apparently people are no longer worried about an earnings recession or an economic recession in 2020.  I don't know about the earnings recession, but I can tell you there is nothing that can look ahead over 18 months and indicate there will be no recession.  I believe people are looking at the global stock rally and saying that indicates the global economy will recover and there will be no global recession.  That may indeed be the case, but sometimes the stock market gets things wrong.  The economy is like markets, it does not go in a straight line.  The most recent data has not gotten worse, but by no means has there been an all clear on the upside.  It will probably take 2-3  months of improvement before we will know if the stock market made a good prediction. 

At this moment in time neither of the Dow indexes have made a new high yet.  XLF and R2000 are still well off their old highs.  XLF actually topped back in Jan. 2018.  It makes me wonder with all this celebration when there are still questions about the stock market.  Now that SPX has made it back to the highs investors have a decision to make.  Will they hold them or will they take some profits?  Since there has been no significant selling on this rally I don't think SPX will be able to get too much into new high ground before pulling back or consolidating.  We need to keep an eye on the Dow indexes to see if they also make new highs.  DJ-30 is pretty close.  However, they both need to do it to clear the Dow sell signal they issued back in Dec. 

With May approaching there will be talk of sell in May and go away.  That has not been effective very often in this bull market.  I think a large part of that has been because the second quarter has usually been the strongest quarter of the year.  I believe that has been because of the sizable tax refunds people have been getting.  That did not happen this year.  Many people were complaining they even had to pay in.  There is still a chance the economy slows some over the next few months.

I have no idea how this will work out.  I do not believe we have an all clear sign that indicates there is nothing but blue skies ahead.  SPX has a unique chart pattern as far as I can tell so history is not much of a guide as to the outcome.  There seems to be plenty of optimism.  Sometimes that is a bad sign.  However, sometimes people are actually right to be very optimistic.   There definitely is no talk of a wall of worry to climb (even though there are things people maybe should be worried about).

In the short term, market internals are weak at this new high.  Sometimes (not always) that means a pullback is forthcoming.  If that happens it should not be a surprise.


Monday, April 22, 2019

Daily update 4/22

Happy Earth day.

SPX gapped down below 2900 and the buyers rushed in.  We can't have that.  However, resistance showed up at the same old place.  SPX made a slight new rally high close (by .5 points), but did not make a new intraday high.  Breadth was -57%.  Small caps were in the red today.  New highs dropped way down to 53.  That is not particularly good.  New lows picked up to 33.  Also not particularly good.

The futures are holding on to 20 SMA support.  So far no strong bounce though.

The green count slipped a little more.  The red count rose a little. 

My breadth indicators are all slightly red  The market continues to look very tired, but the bulls keep supporting SPX at 2900.  The story is the same as Thursday.  Until one side wears out or news comes along that jostles the market we will remain in this ultra narrow range.  I think historically these tiny ranges tend to break to the down side rather than up.  A pullback to the 50 DMA would not be unusual here.


Thursday, April 18, 2019

Daily update 4/18

More selling after the open.  More dip buying when SPX drops below 2900.

SPX managed to close above 2900 yet again.  Breadth was slightly negative.  New highs slipped some more to 68.  New lows were stable at 26.  No launch, no break down.

The futures consolidated all week.

The green count slipped under 50 and the red count crept higher.

The selling after the open continued today.  Every day since crossing 2900 the market has gapped up on the open and every day sellers have showed up.  Every dip below 2900 finds buyers.  Until one group gives up the market is not going anywhere.  Next week there are a lot more earnings coming out.  Maybe that will shake things up, but so far earnings have not had much impact on the market.  Patience.

Have a great Easter weekend.  Remember the reason we celebrate Good Friday and Easter Sunday.


Wednesday, April 17, 2019

Daily update 4/17

Small caps were hit again.

Since SPX closed above 2900 on 4/12 there has been significant selling right after the opening bell.  I guess after the last two days exhibited that pattern more people jumped on the bandwagon today.  The futures dropped 19 points in the first 45 minutes.  Breadth was -57%.  New highs dropped way down to 78.  New lows picked up a bit to 27.  SPX held 2900 at the close, but the bulls had to work a little to support the market.

The futures tested the 20 SMA, but held.  They are right on the line after hours as I write this.

The green count is still hanging out above 50.  I see the red line turning up though.  We could get a negative cross pretty easily now.

I do not know who has been doing the selling right after the open.  Nor do I know how much they have to sell.  It is obvious the market is not going significantly higher until they finish.  They have been selling into upside gaps so overnight news is not the reason.  Tomorrow should be interesting with SPX perched right at 2900 tonight.  A break down could bring on some additional selling pressure.  On the other hand, SPX has consolidated four days above 2900 so a push higher off of support could happen.  The market still looks rather tired to me though. 


Tuesday, April 16, 2019

Daily update 4/16

Some people are selling into upside gaps lately.

While SPX closed positive it was still fractionally below the close from Friday.  Volume was up considerably which is a bit odd.  Since SPX closed well below the open that suggests considerable selling into strength.  Breadth was +51%.  New highs were down a bit to 128.  New lows were up a bit to 24.  The market is rising on overnight gaps.  There is little buying interest during the day except on the bigger dips. 

The futures are still consolidating. 

The green count turned up slightly and remains above 50. 

The volatility is really draining out of the market.  We seem to be running out of buying interest, but there are very few sellers.  So far earnings season has not changed anything, but it is just beginning.  I heard Bob Pisani saying that of the companies reporting so far most are beating earnings estimates as expected.  However, he mentioned there was some trouble with revenue.  I think it is too soon to say how the earnings season will affect the market.  This is a good time to be patient.


Monday, April 15, 2019

Daily update 4/15 OECD total leading indicator

Low volatility ruled the day.

The market didn't do anything worth talking about.  Breadth was -52%.  New highs were good at 137.  New lows were stable at 22 which is a bit elevated this close to the high.

The futures are consolidating in a fairly tight range.

The green count slipped down to just above 50. 

The market appears to be waiting for more information before deciding whether to break out and move higher or not.  I guess the earnings will tell the tale eventually.

Last week it seemed like Mnuchin was talking about all the things China was agreeing to.  Which caused me to write on Friday "I am getting really suspicious of China because I keep hearing about them giving concessions in the trade negotiations.  That seems very odd unless they are getting very worried about their economy and tariffs."  What I heard today was a lot of backpedaling from Mnuchin.  This is not really all that surprising to me given I was shocked at what he was saying China had agreed to.  I don't think we are anywhere near close to a deal as we were being led to believe last week.

I have commented a number of times the global economy is the weakest it has been since the great recession ended.  This chart shows just how close to trouble we are.

This indicator is down to 99.1.  Crossing below 99 has always signaled a global recession was imminent or already in process.  I am not smart enough to know whether we will avoid a global recession or not.  The risk still seems to be there though.


Friday, April 12, 2019

Daily update 4/12

Good economic news from China was the excuse for another gap up. 

SPX ran a little higher after the open for a few minutes.  However, most of the day was sideways.  Volume was elevated though.  Breadth was +60%.  New highs expanded to 150.  New lows were up a bit to 21.  Pretty straight up rally.

The futures popped up overnight then held on during the day.

The green count was up today, but is short of overbought.

SPX keeps marching higher, but most of the move lately has been on overnight gaps.  During the day there is not much buying or selling interest.  SPX also keeps leaving gaps behind.  That makes me wonder when they will get filled.  JPM was lauded for having a great quarter.  I did not really hear much else though.  I guess we will find or more next week.

The German government lowered their 2019 GDP estimate from 1% to .5%.  Since government estimates are always high this is like saying odds of a recession are high.  That news was totally ignored in favor of big loan growth in China.  I am getting really suspicious of China because I keep hearing about them giving concessions in the trade negotiations.  That seems very odd unless they are getting very worried about their economy and tariffs.  I also have seen auto sales data from China that is really, really bad.  I think there is still considerable risk to the global economic outlook.  The market seems to disagree with that assessment though.  We will have to wait for more data to settle that argument.

Have a great weekend.


Thursday, April 11, 2019

Daily update 4/11

The market was back to looking tired again.

Today's gap up was met with some selling right from the start.  Nothing too serious, just a constant hitting of the bids.  There was a sizable sell program mid day, but it was short lived.  It served to hold the market down until the last hour though.  The last hour brought a rally to get SPX back to even.  Breadth was slightly positive.  New highs were good again at 120.  New lows were up to 17.  Volume was light as investors await the upcoming earnings season.

The futures are in a holding pattern for the moment.

The green count remains above 50, but slipped a bit today.

The market has come to equilibrium as everybody waits for more information to act on.  Even positive trade talk could not spark more buying today.  It is now all about earnings.  Unfortunately I do not have a crystal ball to predict how the market will react to earnings season.  I have seen day to day volatility be high in situations like this.  Some days a group of positive earnings can spark buying while a group of negative earnings sparks selling.  Should that happen it could persist for a few weeks until investors get a grip on the overall situation.


Wednesday, April 10, 2019

Daily update 4/10 Did the Jobs Report Give You a Peaceful Easy Feeling?

Bizarre day.  The bulls piled back into small caps like it was a mistake to sell them yesterday.

I think the bulls are making an effort to support SPX above the Jan. 2018 high.  They were successful today.  Breadth was +71%.  New highs picked up to 126.  New lows were stable at 10.

The futures bounced off the 20 SMA, but have not reached a new high yet.  Maybe tomorrow.

The green count recrossed the 50 line. 

Last night I said I thought it was odd that small caps sold off so hard if the reason for the selling was trade tariffs.  I guess other people must have thought that as well since they went on a buying spree today.  What happens now?  I don't have a clue.  We will have to see how the market reacts to earnings.  It is rather odd to have estimates lowered this much and the market fly up.  Usually the market moves lower then companies beat and stocks fly up.  I wonder if it will take really big beats to raise prices.  Misses could get beat up bad if the stock was recently rallying.  I think it will be an interesting earnings season. 

This is a pretty good look inside the latest employment report.  Given the drop in the JOLTS job openings data we need to keep abreast of what the job market is doing.  Did the Jobs Report Give You a Peaceful Easy Feeling?


Tuesday, April 9, 2019

Daily update 4/9

A down day.  How weird is that.

There was talk of possible tariffs on Europe that caused a downside gap this morning.  The dip buyers showed up mid morning and mounted a pretty strong bounce, but the sellers came back and kept the market down.  Breadth was -72%.  New highs dropped way down to 63.  New lows picked up a bit to 13.  SPX held above the Jan. high by a few points.  Will it be able to stay there though?

Today's pullback was contained at the 20 SMA.  The futures are sitting right on that line as I write this.  Will we see a break or bounce?

The green count dropped below 50, but remains above the red line.

The breadth was pretty negative for one day off a new rally high.  Small caps were hit the hardest.  That is interesting since they would be the least affected by tariffs which was supposed to be the excuse for the sell off.  I wonder if the JOLTS report had something to do with that.  That survey showed the biggest drop in job openings in 42 months.  The job market may be starting to weaken.  That would not be a good thing at this point.  R2000 is showing a possible double top at the 200 DMA.  That could be significant.

As tired as the market looked yesterday I suspect the pullback will have further to run.  This is kind of tricky here as further downside could indicate the break out over the Jan. 2018 high has failed.  The financials start reporting on Friday and that could be important for the market.  I do not know if this is just a garden variety pullback or something more problematic at this time.  Earnings will likely decide that and I cannot predict how the market is going to react to what it hears.


Monday, April 8, 2019

Daily update 4/8

It was a bit of a mixed day.

After a down opening there was a late day push to a slight new rally high close.  Breadth was slightly positive.  New highs dropped down to 97.  New lows remained low at 6.  There was some volume on the late day rally.  I don't know if there was some kind of news involved or not.

The futures continue their slow push higher.  Volatility overnight has been very low lately.

The green count is slipping lower the last several days.  The rally must be thinning out a bit.

Breadth is weakening and volatility is contracting like the market is getting a little tired.  Sometimes that leads to a little pullback.  So far there has been little interest in selling the rally though.  I don't know if earnings season will change that or not.

Investors have been bidding up stocks since the Dec. low on the theory that everything will be fine and that the trough in the global economy is at hand.  I believe the rally has convinced many people the global economy is stabilizing.  The economic data is not showing that yet though.  Is the market right or is this one of those times it has gotten things wrong?  The trough in the market is usually about 3-4 months ahead of the economy.  By that count the global economy should be ready to turn up very soon.  ECRI has not said their long lead indexes have turned up yet.  Rather their latest reports seem to indicate they expect continued weakness.  The U.S. leading indicator has been sideways since Oct.  There is no clear sign whether the U.S. economy will weaken or strengthen from here.  I suspect people might hesitate to keep pushing prices much higher until they can "see" they are correct.   Earnings season may shed some light one way or the other.



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