Good morning.. The week has been rough so far and it looks like more to come. Between computers, webhosts and oh yeah the markets unstable oscillations here. This morning we are gapping up rejecting what was yesterday’s close on the lows. This market is resilient and we will test that again today.
Around the world
Asia
Hang Seng and Shanghai both had a rough day yesterday showing sympathy to the US markets and closing down a little over 1% on both. Japan’s Nikkei was flat.
Europe
The DAX and FTSE are on a tear this morning now up over 1/2 of a percent. Good retail news out of Britain and a bounce in consumer confidence in Europe helping to fuel the market optimism.
United States
Economic news
This morning we are awaiting the weekly jobless claims at 8:30. There is Fed and Treasury chatter in the air today and we know how effective that can be.
Breadth Charts
40 DMA % Index
Still skimming the top here. While we did curl, all three indices remain above their respective 40 DMA. The RUT is the closest to making the "sell" crossing here and sending out a bearish call but until that happens this chart is going to oscillate between bullish and neutral and today it is neutral.
10 Day High – Low
Our ten day high low charts are looking pretty week in here. They score a -6 today on all three indices. A strong open that holds this morning could turn the charts around and the moving average is low enough now that a moderately strong day could begin a rebuild process. The market is definitely in a fight here trying to go higher which has lead to these 1% swings in the Russell over the last couple of days.
52 Week New Highs
Weakness continues to creep into the 52 week new highs scoring a -6 today on the charts. The hurdle bar needed to turn the moving average around and hence the scoring have drop considerably now so we could rebuild from here but usually we rebuild from lower 52 week new high counts.
Conclusion
| Chart | Score |
| 40 DMA % Index | 0 |
| 10 Day High – Low | -6 |
| 52 Week New Highs | -6 |
| Total | -12 |
The charts score a -12 today which is quite bearish. We are just waiting for the 40 DMA % index to confirm which is a slower indicator. Today it looks like a healthy gap up is forming. Any pause in the open and I would jump on that baby for a short.
The chart is in death throes here wrestling with wanting to make higher highs and carrying a lot of bears on its back with it. These up and downs are typical at a top but can go on for longer than we want. That January top formed a couple of times only to push higher and finally succumb.
We continue to look for weaker breadth. The problem is at the top the breadth starts to move back and forth like that bearish -12 score. A decent follow through from today’s open and we could easily be talking about a +18 score tomorrow.
$SPX
Call it seasonality, spring fever, end of the month fun and games whatever but this market can not stay unhappy for more than 24 hours. Sell offs are bought and the market moves higher. That 1175 area is the new top and awaiting a test today. The 1168 area is the support for today. A break of 1168 and the gap is done and downside becomes the worry for today. A hold at 1168 puts 1180 in play today.
There is an auction today with results out at 1pm so watch for moves in that area.
Bulls Plan: Hold the gap or 1168, break into new highs and get all those new shorts to cover on a run to 1180.
Bears Plan: Snap the gap and push below 1168. Drop the markets another .5% down to the 1161 area and close between 1161 and 1168.
Volatility is good if you are on the right side. Learn to read intraday direction.. If you need help join us live in our trading room at http://ttthedge.acrobat.com/traders.
See you in the markets:
Marlin aka RedlionTrader
