Right on cue yesterday the markets sling-shot back to the highs rejecting what was overwhelming volume traded on expiration Friday. One of the problem we have in predicting today is the weak open yesterday set all the breadth numbers on their heads. It is hard to get to a 52 week high per se on a gap down open. That being said the market did show some breadth when it came to the 40 DMA % index and the 52 week new highs. The 10 day high minus low still put in some relatively weaker numbers. The Nasdaq managed to post a new 52 week higher on a day with weaker breadth. The other indices did not confirm. Today is the day to either strengthen the breadth our reject the top.
Looking around the world:
Asia
Mixed in Asia last night as Japan did a little consolidating and the Hang Seng took a rest from the day before 2% pullback.
Europe
Europe is putting in a solid morning.
United States
All news at 10am. Watch out for a market turning point here.
Economic news
Breadth Charts
40 DMA % Index
Our 40 DMA percent index chart put in a higher day on all three indices. That returns the chart from its neutral score from yesterday to a bullish +6.
10 Day High - Low
Split score on the 10 day high - low today. The NYSE was relatively weak compared to it sisters, putting in a weaker day around that gap opening. That scores the NYSE as a -2 while the others put in zeros for a total score of -2.
52 Week New Highs
The 52 week new high chart is also a mixed score here with the NYSE putting in a weaker performance with a -2 score while the Rut and Nasdaq put in +2 scores each with both their higher day bars and their higher 5 day moving average.
Conclusion
| Chart | Score |
| 40 DMA % Index | +6 |
| 10 Day High - Low | -2 |
| 52 Week New Highs | +4 |
| Total | +8 |
The charts put in a bullish +8 from yesterday's mainly neutral number. We are beginning that oscillation process that has in the past marked a temporary top.
We bounced off that 1153 area and shot right back up to the high area from Friday's OPEX. This is the typical topping action that we have seen during this bull run starting in March 09. If this pattern continues we should in the next two trading days revisit that 1153 area where we will have to evaluate the breadth and see if we have enough to return one more time to the highs before going into a 3% correction on the SPX. That is the template I am using until things go horribly wrong.
So lets stick some mile markers in the road to set the pace. The weakest link is the NYSE. Getting this to strengthen would help blast off to new highs so we will watch the 52 week new highs during the opening 30 minutes. To turn things half way around the NYSE new highs must be 120 in the first 30 minutes. To really turn up the throttle the NYSE new highs need to be in the 210 area within the first 30 minutes. If we hit that first goal of 120 and you are short you might want to think about getting out. If we hit that second goal get out. This means the NYSE is going to rotate into the leadership roll and we are most likely going to break out and head up into new highs in a new thrust.
The 10 am news on housing will be a good spot for the market to find reason to become stronger.
$SPX
We remain in our box of 1141.30 to 1170. If what I think will happen in the next 5 days materializes, I should not have to move the green or red lines as our price movement will be contained therein. That means playing the market back and forth short and long. I am predicting a trip down to 1153 sometime in the next two days. It will either be today or if we get an NR7 type day it will be tomorrow. Any breakout of the highs I will evaluate against breadth. If the breakout is on weaker breadth I will be shorting. The market is unstable here and volume is dropping off making it more susceptible to games and shenanigans or just the natural fluctuations of large block trades. It could kick off in either direction but my best guess remains down from here.
Bull Plan: Garner strength, get the NYSE stocks moving and lead the market up and over the 1170 area and hold. A close above 1170 will show the bears that yesterday's action was not just a one day show.
Bears Plan: Take advantage of the tired bulls here push the market down quickly to 1157 and then drift down to the 1153 area before putting in a close between 1153 and 1157.
