Premarkets were down 0.50% as Ukraine war issues refuses to go away. China manufacturing PMI misses 6th month in a row and home sales collapse 47% almost insuring a down session for this start of the week.
Markets opened down -0.70% with large gaps, which may mean a market reversal before the day is over. By 10 am the averages had melted off the opening lows on moderate volume and headed to close the gaps left at the opening.
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 5.77. I would advise caution in taking any position during this volatile transition period although Barchart.com shows a 24 % sell. (Remember this has been negative for weeks.) Investing.com members’ sentiments are 65% bearish.
In looking at the 50 DMA, the current SP500 opened above that line and the small caps opened below the 145 DMA. I can not see, as of right now where those MA’s are rolling over to indicate any permanent bear run but the failing small caps are a real worry.
We have seen similar action at the beginning of Feb, 2014 when the SP500 went below the 100 DMA and actually touched the 145 DMA and then rebounded to set new historic highs in the beginning of this month.
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.
I still believe that Mr. Market is STILL not through playing with us 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.
