Premarkets were up +0.50% prior to 8 am and started to fall off after US financial reporting at 8:30 am. after a government report showed a bigger decline (-1.7% down from +3.2%) in non-farm productivity than expected in the first quarter.
Markets opened flat (+0.05%), but in the green and slowly melted upwards on low volume to +0.35%. By the 15 minute mark the averages fell off the opening highs falling with the small caps in the red and the large caps barely holding on to the opening gains. By 10 am the averages were trending down wiping out opening gains and moving solidly into red territory. ** DANGER **
Interesting analysis following our thoughts regarding the headwinds the SP500 faces in moving higher. Is the fat lady now clearing her throat for the markets swan song?
Michael O’Rourke: U.S. stocks may be the walking dead
It’s a classic zombie scenario: The dead are dead, but don’t know they’re dead. And that could be this market, warns JonesTrading’s Michael O’Rourke.
Michael O’Rourke: U.S. stocks may be the walking dead
We have continually written about the stock market not reflecting ‘true’ financial strength and fundamentals. In the chart below, look how the equities are NOT following earnings.
The Distorted Stock Market In One Chart
In the long run, earnings are the most important driver of stock prices.
So, it would make sense that stock prices would fall if earnings expectations fell and vice versa.
But in recent years, that relationship hasn’t held.*
“Markets stopped following fundamentals about two years ago,” said Matt King, a credit products strategist with Citi.
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click on image for larger view)
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 abovezero at +5.50. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 40 % buy. (I am not so sure about this.) Investing.com members’ sentiments are 61 % bearish.
