The SPX was taken out of its flag pattern above 1135-1136 as the program lights lit up at 3 PM. The SPX was in a Slim Jim from 12:15 pm until the last hour breakout, which forced technical buyers in as the SPY traded above 114. The SPY volume was 35.7 mm yesterday, vs. 37.4 mm the previous day. There was also some rebalancing going on, in addition to the 6-month report card period for the Generals. As was said in yesterday’s commentary, the “gang” had a favorable pattern to work with and a quiet market and at 3 PM it was easy to accelerate a move out of the flag, forcing buyers to reach for price along with the technical buyers, most of which had probably missed the real opportunity at the rising 200-day EMA with other significant confluence. That was about 5% lower around the 1080 level.
NYSE volume expanded yesterday to 1.44 billion, with the volume ratio 79 and breadth +1293 as the SPX closed at 1144.04, +0.8% on the day. The Dow was also +0.8% at 10480. The QQQ closed at 37.12, +1.2%, with another push from the semis, which as I said the other day, must be a leader along with the brokers for the SPX to have a chance at getting through the 1150-1161 zone.
The SMH was 2.2% yesterday vs +3.0% the previous day while volume declined a bit to 21 mm shares from 25.5 mm shares the previous day. The brokers (XBD) put on another +1.4% day following the same on Tuesday. Coming into the 6-month report card, I said previously that it was decision time by the Generals for the Semis and Brokers as they have been overweighted in both and a decision was/is whether they would be able to push price into the June report card. They are also overweighted in the basics and some other cyclicals and I see that the CYC was +1.7% yesterday and XLB +1.1%, so the three moving together tells you they will try to hold price, barring some terror tragedy which will send the indices down like a knife. What have you done to protect your longer-term index gains since the 10/02 lows? If the answer is ‘nothing’ and you are naked long, then “good luck on your mission” because the risk is extreme during this current time zone into the November elections.
style=’font-size:10.0pt;font-family:Arial;color:blue’>% Range style=’font-size:10.0pt;font-family:Arial;color:black’>Â style=’font-size:9.5pt;font-family:Arial’>
