They are not making it easy today, and it reminds me a bit of yesterday. Yesterday, the market was weak all morning but left us with a happy finish. Selling in the morning and buying into the close is bullish. Interestingly, the S&P 500 and NASDAQ 100 are swapping leadership back and forth this morning. It is a bit like the wife directing me to place the furniture.
We had a two-step liquidation break off the open. The pop-down helped clear out the weak hands (it almost got mine). The market went right back into that dastardly balance range. Not again???
While the price flirted below 4022 (on the S&P 500), “value” (70% of the volume location) is unchanged from yesterday. The situation, then, remains positive and still calls for a hat tip favoring the bulls, though ever so slightly.
Don’t get me wrong; the failed breakout thus far is a disappointment. But today is far from over. I will use the 11:30 am EST lows as my line in the sand for the rest of the day.
I do not see anything newsworthy to mention. The IWM (Russell 2000) has hit its WEM high, so I am done there for the week. Both the NASDAQ 100 and S&P 500 have room to run, but it is a hard-fought battle. That is not a surprise at these levels.
Could we possibly be forming a double top on the S&P 500 with the NASDAQ 100 coming in a bit lower? Sure, but I would not call it yet. I am bothered by the shallow levels we see on the put/call ratio. The surging put/call ratio and negative sentiment gave me the confidence to go in and stay put a few weeks ago. I wouldn’t say I like it when the crowd is complacent. It always makes me want to go the other way.
Perhaps offsetting the complacency, 10-year rates continue to behave, down slightly to the 1.5% level today. As well, sometimes they launch the trading algorithms mid-day, and the gamma squeeze will help the market wind steadily higher. Let’s see.
If we maintain the lows, my bias remains long, and I will make final decisions in the last 30-minutes of trading. As usual, I will post any changes.
I think traders are selling all morning in Chicago and New York, and then the hedge funds are jumping in over lunch. Isn’t this fun? I think I might have suggested you to take the summer off. You know what they say, “sell in May and go away.”
It is 7:30 pm here in Kefalonia, Greece as I write this, with a beautiful sunset over the Ionian Sea. While I am not here on the best of occasions, it would be nice to open a bottle of wine on the beach. But the U.S. stock market is open until 11:00 pm!
As always, stay tuned.
A.F. Thornton