Premarkets were down almost -0.20% from yesterday’s close, oils were down and the US dollar was up.
The markets opened flat and in the red and slowly melted upwards on low volume. By the 15 minute mark the averages had topped out at almost +0.30% and continued to climb after a short pause. By 10 am the large caps were closing in on the historical closing highs and the $VIX had fallen to the low 13’s. Today should not be any different than recent past session and susceptible to sudden reversals where investors should be on alert.
The short term indicators are leaning towards the hold side at the opening. The all important signs of reversal, up or down, have not been observed so we are mostly, at best, neutral and conservatively holding. The important DMA’s, volume and a host of other studies have not turned, only a past 6% correction (and recovery) and that is not enough for me to start shorting. The SP500 MACD has turned flat, but remains above zero at 6.16. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 80 % buy. (Remember this has been negative for weeks.) Investing.com members’ sentiments are 66 % bearish.
In looking at the 50 DMA, the current SP500 opened above that line and the small caps remain below the 145 DMA forming a head and shoulder formation. I can not see, as of right now where those large cap MA’s are rolling over to indicate any permanent bear run but the falling small caps are a real worry.
Bottom line here is that I have not seen any serious bears jumping out of the woods just yet, although I am VERY concerned that ANY correction could turn nasty in a heart beat.
It is still possible that Mr. Market is not through playing with the averages and even newer historical highs are a distinct possibility beyond what we have seen, mainly because the amount of bond buying the Fed still does on a monthly basis. For those who are hell-bent bears, this article, 5 Reasons Your Simple Bear Market Plans Could Backfire, should be required reading.
