Mid-day Technical Video
Just past mid-day. US indices have pushed higher to the tune of around 0.50%, with NASDAQ moving up 1.2%. Breadth is a paltry 3/2 positive, but 8 of 11 sectors are positive on the day, with just Energy, Telecom and REITS lower. Materials leading the charge for today with PPG, DWDP, EMN, BLL, ALB, LYB, MOS all up 1.5% or better. Technology also showing strength of more than 0.75% as LRCX, ADS, GLW, AMAT up 2%, while IBM, INTC, STX, CSCO all lower. Not much snapback in Transports today, and OIH is still lower on the session.. but Healthcare strong, and this group remains one to overweight and favor. Elsewhere, Europe managed to rally back to positive territory by a fractional amount, while the Dollar has ripped back up 0.50% and coinciding with Gold dropping down under 1230, something which seemed to be an important area 1 week ago.
Overall, the next 2 days will be important to the near-term Bearish call. China still pretty negative technically and one can’t make much of Europe given today and remains in an ongoing downtrend. But NASDAQ pushing back to new highs isn’t necessarily something to buy into given the last couple days of choppy sideways action as this move to new highs is not being accompanied by momentum, and Demark signals will come together tomorrow to suggest a possible high. WHERE IS THIS THINKING WRONG? OVER NDX 7450 on a daily close.. one would have to postpone the thinking of an immediate decline this week, while over 2820 allows for a push up into 2841-3 or higher potentially to test late Jan highs into July 26-27, and our thinking of this being a low would then turn out to be a high. For now. Its still early to make that call, and given some of the signals in Tech and the lousy participation in Transports and Financials, it’s still right to consider buying implied volatlity and watching carefully what happens over the next 1-2 days
NASDAQ Pushing back to new highs looks attractive on daily charts.. though tomorrow will mark the first confluence of Daily TD Sells since the February and April lows
DJIA also not responding and still below June peaks, while most of Europe and Asia have trended lower.
S&P Futures push back to new highs occurring on much lower momentum- We’ll see if this matters or not as area at 2810-5 is important and can’t get much above 2820 without thinking this will be postponed.
But for now, breadth is poor and momentum is diverging.. 2 key reasons why its smart not to consider joining the rally at this stage