Today’s Economic News:
Quote of the Day:
I detest the man who hides one thing in the depths of his heart and speaks forth another.
–Homer
Featured Breadth Chart of the Day:
Short-term trender continues to make its move toward the bear’s den.
Comments and Levels for the Front ES (S&P500 – Emini futures) contract:
Short: 1774
Long: 1748
We remain cautious for a pop but it is looking increasingly like a pop we will want to short. Our breadth continues to fall back. If you don’t usually read beyond this paragraph, make sure you peer through the charts below. We have fewer and fewer stocks holding up the premise that this market is climbing higher. It must be how the 1% feel about supporting the rest of us.
Here is a chart showing the A/D lines from yesterday for the various markets. That spread of the Dow on top with a 6:1 A/D line and the broader NYSE at 1:1 and the Russell negative is not a bullish market. It is protective at best with investors rolling out of risk (the Russell 2000) and into safety (Dow 30).
The big news today is Twitter, which I understand got priced at $26. This will not only be a test for this market as far as pricing, but in the technical ability to seamlessly roll out a major IPO. The Facebook IPO made the Obamacare rollout look like an Apple launch.
There are outside influences on the market today that could have us going higher and making the day a tough call. We have 1774 as the next higher high exhaustion point. We think 1774 should hold unless we just want to buy everything today.
Watch the breadth today, it could roll in like a 2nd wave and basically right the ship, in which case tomorrow we will be talking about a Santa rally again, but for now, the market action yesterday really shook us up, it kind of scared us.
So if we sputter to 1774, we want to be weighted short for the longer term. A move lower to 1748 and the bulls should be showing their buying power again, if not, our next downside for a swing low is 1739. That would be our first 2% correction since 10/15. It is getting to be time again. Sputter vs. a breadth wave rolling in. Make sure you can distinguish each — although price is king, not all prices are the same.
On the MiM:
While the MiM showed a decent size negative dollar volume (-434M on the close) the Symbol % number just was not justifying an entry according to my personal trading rules. Remember, I wanted to see something below –66% on both the Symbol Percent and the Dollar Percent.
Here is an observation about the closing symbols, though, and it relates to what I wrote this AM about the sputtering market breadth. I saw some big sales mostly on the protective stocks at the close. They were not buying something else, they were going to cash, a silent exit that has made me a bit more cautious about calling for a continual bull over the next week, in fact it has made me suspiciously bearish.
Don’t forget, if you are a MiM rider or want to be a MiM rider, the MrTopStep IM Pro room is open for free starting tomorrow and rolling for 5 trading days. I come into the room every day around 3pm to trade the MiM and talk and answer questions about it. It is a great way to get a deeper appreciation of this indicator and to evaluate its value. The MiM is free to IM Pro members and for the boot camp attendees. If you want a free ride (well, it is $7) go to http://chat.mrtopstep.com/bootcamp and sign up for your ticket.
If you want to join the meter readers you can go to: Join the MiM
Comments about TLT (Twenty year Bond ETF):
We continue to watch the 104.50 area as TLT is in a holding pattern right now. TLT is waiting for the jobs number. Good number and TLT will drop down to 102.50 and bad number, back up to 106.50. TLT thrives on bad news and extended QE.
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Breadth Charts in Full :
Zweig Breadth Thrust:
Our Zweig did hook up on yesterday’s action. It looks like a slightly weaker open today. If that doesn’t improve we might just get that correction down to the 47 area.
Cumulative Volume Index:
There is a brick on the head of the market. Jobs numbers on Friday that surprise to the upside could break out. Those numbers will have an asterisk on them if bad since they will reflect the senseless closing of the government.
Number of NYSE issues trading ABOVE their 40 day moving average (40DPI):
Weaker.
New Highs / New Lows ratio chart:
Bearish divergence here as we lose some of that buying on the highs exuberance.
Trenders:
Short Term Trender - McClellan Summation Index:
Bearish.
Long Term Trender - Cumulative 4-week Highs – Lows (the fat lady):
Bullish.
Thank you for Reading –
Marlin aka RedlionTrader @redliontrader