Good Morning – RedlionTrader’s First Call for
One of the pioneers of Technical Analysis and market breadth dynamics, Dr. Martin Zweig has passed at the age of 70. His work has been an inspiration in what I do each day and I feel like a flea standing on the shoulders of giants of great men & women like Dr. Zweig. We have lost another great one. For his work, writings and inventions I am truly grateful. RIP.
Asia – CLOSED
Europe as of 7:17am EDT
Today’s Economic News:
ZEW is looking good, in fact the best in a very long time as feelings are improving. Not much in the USA today.
Quote of the Day:
Current Breadth Readings: (click here to see all our breadth charts)
The anatomy of an undercover correction. I want to show our 40 DP Index. It is the number of stocks on the NYSE that are trading below their 40 day moving average. We had been in the elite 80’s and that has since move below a better 69%. At some point enough “breadth” of the market will have corrected to find another pool of eager buyers and lifting the indexes yet higher again. We need price to break before this index corrects enough.
ES SP500 Futures Comments:
We have moved up our upside target yet one more time and are now looking for that “just too high reach” that should reverse into a correction, a market stall and reversal move.
We are now ten points above where we thought that reach might first happen. That call was around 1516 two weeks ago! That is how dangerous this market has been to the upside and we were fairly conservative on our top probing expedition.
We still have not had the 1K tick that produces that day high with bullish capitulation and until we do this market remains destined for crawling higher, just a few points at a time.
Our downside remains 1491 area for now, our contract high is at 1522.
US Dollar DX Futures Comments:
We have been right about the bullish call on the dollar as we hit that 80.85 area, the next upside for us is the 81 area but we expect to see 80.43 first and maybe 80.30.
TLT Twenty Year Bond ETF Comments:
Like the equity market, the TLT has not been paying attention to our clock and continues to linger along what is looking like a substantial bottom for now. We continue to look for 118.50.
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What we have is a strong bull market that still has strong breadth and is taking a very long time to do some unwinding. The underpinnings in breadth continue to weaken but we are looking for a crack in the price that has yet to appear.
Our Zweig remains above 50%, we need to see that negative 2:1 and greater day with some follow through before we can see the market top being formed:
The CVI is showing just a tad of weakness, we need to compound that before we get to excited:
It is our 40 DPI that has taken the biggest hit, at some point this will correct and we are going to get another bull run.
We would like to see more movement on the NH/NLs:
We are Neutral on the one trender now. A full neutral, not a bullish neutral. If we have another red day today our trender will go bearish-neutral tomorrow and then full bear so we are seeing a turn in the McClellan Summation Index:
The cumulative 4 week New Highs / New Lows however remain solidly bullish: