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Thursday, May 24, 2012

Running On Fumes

 I expected a fairly weak bounce off the recent plunge, and that appears to be exactly what we are getting. After yesterday's move it was starting to look like we might get some traction, escpecially with the increase in volume, but there was no follow through today. We did get another late news driven ramp job, but those have not been carrying much weight lately. It looks to me like we may get about as far as 1340, but highly unlikely we will get past that.

The Nasdaq 100 is already encountering resistance, and may have already run out of gas.  Notice how much faster the 50dema is dropping here as opposed to the SPX: there is a lot of downward momentum here to overcome.

The Russell 2000 doesn't look a whole lot better, but does appear to be getting through resistance here. It is also approaching even tougher resistance just above it, and has descending moving averages to contend with. This doesn't look like it is going to go a lot higher either.

The percentage of stocks above the 50dma plunged to an extreme low level last week, and are understandably getting a bounce, but it is unlikely they will continue to rise past 35 before we get a pullback. On the plus side, in historical terms it is unlikely this will go back as low as it was last week; however I wouldn;t be even remotely bullish until this gets back above 35 and establishes an up trend, That will probably take a while.

On a relative basis the plunge on the Nasdaq was not as bad, but the bounce back up is not as strong, either. This needs to get above 30 for the market to really get going, and right now it doesn't look like it is going to do it anytime soon.

The snapback rally is running out of strength, which means we are going to get more end of day blather to get the markets juiced. So far it hasn't done the job, although it has seemed to stop the bleeding, for now.

I will have the new highs update shortly.

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