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Tuesday, May 28, 2019

Daily update 5/28

Test of the 5/13 low.

SPX made a new low close for the current pullback.  Volume was fairly heavy.  The day started with a slight gap up so the sell off was not on overnight news.  Breadth was -65%.  New highs were good at 128.  New lows were high at 105.  It is very rare to see both over 100. 

The futures are down below the 5/13 low in after hours.  If they are still there in the morning then SPX will start out below the key 2800 support level.  If the dip buyers don't show up then we are starting another leg down.

The red count remains above 50, but a bit below oversold levels.

If the market continues down I had a 2750 target based on the consolidation.  However, in looking at the chart tonight I see it has a head and shoulders top look to it.  A target based on that pattern could be around 2650.  Both of those targets are below the 200 DMA which could catch this pullback.  If SPX breaks the 200 DMA then those other two targets would come into play. 

The biggest worry for this market is that there is very little worry.  There is an obvious triple top in SPX and many indexes did not make a new highs.  Despite the very poor technical condition I am not hearing anybody pointing it out.  What happened to all the perma bears?  Am I just missing them or something?  If SPX ends up breaking the Dec. low it is going to get very ugly.  I would consider this top pattern to have started in Jan. 2018.  We had euphoria and that was clearly the momentum top.  That would probably make this the longest top pattern in the last 100 years.  The bulls have a lot riding on how the current pullback unfolds.


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