"Cloud Computing" Vaporizes

 Had it not been for a rally in commodities and industrials, today would have been much worse than it ended up being. As it was, we retested 1155, which now appears to be the midpoint of an 1130-1180 trading range. MACD, which appeared to be on the verge of giving a sell signal, has now resumed it's up trend, but RSI is declining. It is as if the market is trying to pull back here but some invisible force keeps it from dropping. That "invisible force" may actually be something very visible - the Federal Reserve, which is pumping "liquidity" into the market at an alarming rate. The price? Raw materials (copper, zinc, oil, sugar, corn, etc) are going bananas.

The divergence between the Dow and the Nasdaq was quite striking today. "Cloud computing" stocks took a huge hit today (you live by hype, you die by it), but several other leading stocks took hits as well. MACD on the Nasdaq is hanging in there, but is not getting the bounce that the SPX and Dow are getting.

The Dow is starting to re-assert relative strength. Whether this is short term or if it means trouble, I don't know yet, but this is the "safety trade".

The Dow transports ave been lagging now for the better part of two months. It has been taking bigger hits on down days, saller bounces on up days, and you can see the relative weakness in the MACD.

The Russell 2000 was also weak today, but of late has shown strength, as the MACD has not cpme close to a crossover and is still heading up. I have a target here just about 700, and it olooks like we will hit it soon. how it behaves there will tell us a lot about the health of the market.

Shades of the "recovery" of 2008, which was lead by commodities, thanks to a weakening dollar. Does Bernanke really want a repeat of that episode?

I will have the new highs update shortly.