Below are a few charts that we intend to discuss in the “LIVE” pre-market review, that will pave the road we will follow in the weeks ahead. Barring any unforeseen catalysts, the Big Picture continues to look more bullish than bearish, with news and noise masking this picture short term.
Earnings are in full swing.
SPY is retesting the lost 50sma. RSI should continue higher, while MACD and STO should turn higher as a function of price. They lag price, so we will monitor these together. Most important, TICK cumulative continues to rise, which can only happen if institutions are buying, on balance, more stocks on the uptick than they are selling on the down tick. Monday volume was below average.
There is no sell signal on the NYHL. For a sell signal, the moving average would need to drop further and histogram would need to drop below zero line, as we see in previous occurrences. Price action can ebb and flow above and below the midline of the illustrated Bollinger bands, while price continues to rise. NYSE chart shown,
Breadth is improving. Notes on chart.
“Contango” signaled a peak in fear for the current period, with a spike in the current month VIX, as compared to the three month. This signal usually precedes a rise in equity indices, as we can see in June (Brexit) and November (Presidential elections). Historical precedent suggests a more bullish picture in the days and weeks to follow, despite political tensions.
NDX shows AROON indicator dropping. Monitor today. If the red line continues to drop and the green stays embedded, look for bullish action to prevail. NDX bounced off the 50sma. Big cap tech stocks and leaders should follow through, so FANG should be our focus. If the leaders fail, we will see it in AROON.
Small caps bounced at support. Descending highs continue to be a problem, as price action remains captive to this sideways consolidation. A break in either direction would foretell the “game plan” for our expectations going forward.
Overall, the markets are more bullish than bearish, though there is much to prove in the short term.
Happy Trading – Vinny