The futures were up significantly in the premarket on the back of the G20 meeting and the decline in the dollar. Existing home sales came in at 453,000 at 10am. 23,000 more than expected, most of those were distressed sales.
SPX gapped upward of about seven points then continued upward another seven points to put the high of the day on the chart at 10:00 am. The rest of the day was choppy, mostly in a tight range until the last half hour when sellers arrived and took the index down sharply initially. And we printed an inverted hammer, a sign of exhaustion and rejection or reversal of an uptrend. Interesting to see the VIX up nearly 6% at one point on an up day.
Commodities were strong across the board today except natural gas which was down 2% early and turned positive near the end of the session. Financials were weak again today. The breadth was positive today, the advancing volume was greater than declining volume, but the volume was light on the gap up or breakout and increased heavy during the late selling period.
One stat of interest is that the NYSE Advance/Decline line hit a new high today while New Highs were hitting 305. This is a rather anemic New High total compared to April when we were seeing the A/D line hitting all-time highs and the New Highs were in the 600’s.
So no of this will mean anything unless there is follow through of the selling we saw. And we havent had that in about six weeks. As I have been saying we are overbought according to indicators, but we can stay over bought for extended periods, topping takes longer than bottoming and is harder to call. I'm still shorting this market and 25% in cash. Will add to shorts at 1196.
Long-term bullish commodities, bearish dollar, bullish emerging markets Brazil, India, China, Chile, Peru, Turkey, and South Korea (BIC) (TPCK)
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