Looks like we are settling in for a little gap up this morning which will be just fine with me as it will help determine the direction of trading for the day. If we hold the gap and trade up then long and strong. If the gap fails then I am emboldened on the short side.
While we were sleeping:
Asia
Japan is on a roll hitting year highs again with another 1% gain. Hang Seng and Shanghai were a little more subdued with Shanghai up just above breakeven at .15%. All three ended up on their highs of the day with the Nikkei putting in a nice trend day from left bottom to right top.
Europe
In Europe we are trading off the highs now down to breakeven (curious as to why the futures haven’t moved back down?). The majors are currently trading at their day lows after nice gap opens.
United States
Economic news
Housing market is a real Debbie downer on our recovery and today at 9am we will find out how much less our homes are worth than last year. Expectations are for a continued slowing. 10 am consumer confidence will either help crush the gap or give full to run to new highs. Be careful.
Breadth Charts
40 DMA % Index
The Nasdaq 40 DMA chart did not generate this morning so we are going to have to score with two data points. The NYSE 40 DMA has returned above its 20 DMA and that move returns it to a bullish mode. The Nasdaq I am going to model after the RUT since it had a similar day yesterday. Both remain below their 20 DMA and hence bearish but with an upturn that forces the score to neutral. So this chart today scores a +2.
10 Day High – Low
Like the above chart the 10 day high minus low will score a +2 today based on the NYSE’s strength and the RUTs and Nasdaq’s indecision.
52 Week New Highs
The 52 week charts continue to show slowing in momentum unable to put in multiple days of higher bars. We need a good little correction here to reset the bars and let them build back up some momentum. Today we need 100ish in the first hour to stay neutral and 180ish to become bullish. Scoring for these charts today is a neutral 0. (higher daily bars but underperforming the 5 DMA)
Conclusion
| Chart | Score |
| 40 DMA % Index | +2 |
| 10 Day High – Low | +2 |
| 52 Week New Highs | 0 |
| Total | +4 |
The charts are putting a weak bull side neutral today. The key is in the NYSE and the newly found strength of that index. A rally in the energies and renewed strength in the financials could help keep the NYSE moving forward while the previous leaders go through some type of well deserved sideways corrective phase rest. I will be watching the NYSE today for strength and the RUT for weakness.
$SPX
I have the SPX trapped here between 1175 and 1161. A break out this morning above 1175 puts new highs as a possibility. I am waiting for the 9 am news this morning to see which way the gap will setup. The SPX put in an unfilled gap yesterday at 1167 so a push by the bears down to fill that gap will be a good possible play to watch. Breaking 1161 today would place a corrective phase in place.
Bulls Plan: Gap open above 1174 and use it as support to put in a test of the new highs. Close above 1176.
Bears Plan: Force the Bulls to close that 1167 gap and push some prices below 1161. A close below 1169.
This market could break either way here. Loss of breadth momentum would suggest we need a little more weakening before attempting new highs but the price performance is suggesting something else. Price is king but momentum is his horse and even a king can not fight long without a horse. Our indicators are a jumble with NYSE showing bullish signs and the RUT and NASDAQ showing bearish signs, a divergence that hopefully today will correct.
For you TF traders I have posted another video at. http://www.screencast.com/t/MzljMDI0O with my daily view of the Russell 2000.
Good luck in the markets.. hope to see you at http://ttthedge.acrobat.com/traders
Marlin
