INDEX UPDATE
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With the selloff of the market this week, and yesterday's strong down day, it is obvious that my SHORT-TERM indicators are showing CLASS 1 BUYS accross the board to initate at the low today.
Now the question is if the market does pop, how high will it go. I feel that there is still helium in the market although with this weeks pullback the amount of helium has reduced. Unless the market internals improve dramatically, which will be tough to do, I feel that the best the market can do is retest the recent highs. but strongly doubt new highs for the near term (next few cycles).
The market internals are simply awful, showing increasing weakness. The NEW HIGH/NEW LOWs went significantly negative. As I have indicated previously, the NEW HIGH/LOW is a leading indicator of a few days to 15 days. The change in the last 2 days is a strong negative indicator showing stronger declines in the near term.
Besides the NEW HIGHs/LOWs, the ADVANCE/DECLINE and the UP/DOWN volume turned significantly negative. Keep in mind that we had strong and increased volume yesterday on very negative day - not a good sign.
Originally did not feel that we would pullback this much. The next strong support for the DOW is at 8850 range. I still believe we will move up one more time before topping again at the end of the month/early AUG. With the stronger than expected recent pullback feel that next week should be slightly up(maybe regain 50%-60% of the pullback)/flat, then the fun could begin to the downside.
Just heard MARIA finally give a decent morning report. She did mention a rally at the open but added that there were outflows this week of 1.3-1.8 billion, compared to over 3 billion inflows last week.
Feel the 3 main issues for the market are INTEREST RATES(ECONOMY), EARNINGS, LIQUIDITY. Well the interest rates are still low enough, but on a technical basis are showing signs of increasing for the short-term with the short-term target of 5.9-6.0%. Nervousness should increase as the rates increase and if we cross 6% it could be quite damaging. Earnings are relative to the reduced estimates. Even though there are more up surprises to down surprises the earnings overall have dropped. Last but not least, liquidity which we just heard is now in outflow mode, at least for this past week.
There are very few is any good technical signs right now - most are eith negative or flat. However there is still some helium left in the market although at reduced levels.
Right now the futures are up 6.5 and the the fair cash value is flat so we should have a pop at the open. My gut is saying that we should pullback some after the opening pop to close flat to up at the close.
The short-term/limited upswing should start Mon but could start today.
Going back to MAR I had called for a trading range of 8750-9300 which I recently increased the trading range to 8500-9400.
Seeya
S
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