Friday SPX Recap

Good Morning, S&P futures are down five points at this time. I think there are a couple of things going on right now. One is that there is a feeling that QE will end (but really how can it, subject for another discussion). The other is the rising dollar due to Eurozone problems. The dollar is flat this morning, and rests above its 50dma. Further strength in USD will lead to risk off trade and broad based selling.

Friday, we had very good reports out of France and Germany GDP came in above expectations. However, the Consumer Price Index for April rose by +0.4%, which was in line with the consensus for +0.4%. When you strip out food and energy, the so-called Core CPI came in with a gain of +0.2%, which was also in line with expectations for +0.2% and above March’s +0.1%.  

Friday's session began without a gap and quickly popped up almost two points and put the high of the day on the chart just one minute after the open. The rest of the day it lingered lower, closing 10 points lower. Its critical for the SPX to stay at or above the recent breakout of the inverse HNS pattern.

The intraday volume pattern Friday clearly shows a large spike of volume right while the SPX was painting the low of the session and decreasing volume as the index tried to recover. There was clearly a lack of enthusiasm for stocks right now as we head closer to end of QE. On the down days declining volume outpaces declining issues while on the up days advancing volume rarely outpaces advancing issues. This may suggest that this pullback may have more force than we have seen in the last few pullbacks.

Checking the Breadth Indicators they have completely turned around from Thursday night. The McClellan Oscillator has almost reached oversold territory going from 4.76 to (95.5).