The bulls again showed they were in control of the markets meeting their goal of rejecting the gap down open, rallying to a higher high from the recent lows and closing above 1140. The bears might sense some false victory victory in turning back the advance above 1145 but they met none of their objectives as we made both higher highs and higher lows yesterday. Some weakness has crept into the breadth charts so progress may be slowing here.
Around the world:
Asia
Asia just showed a lack of interest yesterday. There were no wild moves during the day just basically flat start to finish.
Europe
Europe opened gap down this morning and has returned to just above green with a .25% type move. Again no real interest in the charts.
United States
Economic news
This morning we will check in to sell how the wholesale inventories look. A .2% growth in inventory is expected and anything more indicates a slowing consumer anything less indicates shelf space for producers to fill. Crude oil numbers will show how we are doing on our spring drawdown from the winter store up.
Earnings
Breadth Charts
40 DMA % Index
I zoomed the charts out to show how high this indicator went after the March 2009 thrust one year ago. You can see that we are approaching that number now. This chat now for the 6 or 7th trading day is scoring a bullish +6.
10 Day High – Low
The 10 day high – low puts in a neutral 0 today as the momentum indicators are still positive but the daily bars are not making new highs. A some point here we should go into a sideways correction with maybe a little 1 to 3% downdraft to gather the strength to propel to the next height.
52 Week New Highs
This chart was also unable to put in higher daily bars. The momentum indicator is still bullish however and the chart scores a 0.
Conclusion
| Chart | Score |
| 40 DMA % Index | +6 |
| 10 Day High – Low | 0 |
| 52 Week New Highs | 0 |
| Total | +6 |
Mildly bullish here. I hope by now if you are religiously reading this daily you begin to get a sense of timing on these charts. The 40 DMA % index is a slow lumbering indicator that when it turns gives a good 2 to 5 day signal. The 10 Day high-low is more finicky and can jump bullish / neutral / bullish / neutral/ bearish/ bullish on a daily basis. It is the trend of the signal that is important to watch. Right now we are in a strong bullish thrust but you can see we are having starting to have difficulty building ten day highs. As time go on (say ten days) those highs of ten days ago will start to become today’s ten day lows making It difficult for the march of higher bars to continue.
The RUT now has two days of lower bars and yet yesterday the prices when higher! This is the type of divergence is what I am looking for in identifying a top to this leg. I am reluctant to begin thinking about a sideways move from here only because I think the SPX wants to set rally highs before first pulling back to regain but some indication of a rest is in place.
$SPX
I moved down our 1146 line to 1145.50 area this morning, all the other lines stand where there were yesterday. You can see that 1136.75 held in the morning and was retested with the afternoon selloff and the 1140 area became like a magnet for a closing price target, drifting up there into the close. Today is another chance for the bulls to push up the price to that 1150 area.
Bull Plan: Regain 1145 and trend up to 1150. Close today above 1150.
Bears Plan: Yesterday was just a first shot at stopping the march. Each attempt above 1145 now needs to be sold for the next few days until the bulls breakdown or the bears get some news aligned with their objective. Eventually the bulls will break and a correction will start stirring up chatter about the inability for the market to make new rally highs on the SPX further encouraging (trapping?) the bears.
Good luck -
Marlin: aka RedlionTrader
