We hit that 145 marker as a low yesterday as predicted and move northwards. There is a bullish element in the air with strong closes yesterday and to some extent the day before. Emotional buying seems to be bearish, but algorithm and technical buying wants more. $CPCE (put to call ratio) hit and pierced the top BB yesterday and that is a classic buy point. What this could suggest is short covering, but again up is up, so for whatever reason this is important.

Also, weekly MACD is pointed northward and had a recent bullish crossover. So our main focus is still upwards.

But, the technicals are mixed. SSTO is 90, and if it drops below 80 we need to respect it. Still some good gains can be made while the SSTO remains above 80. RSI(5) just came off the 70 marker, but it can bounce up there for a while too. RSI(14) hit 30 more recently than 70, so a longer term upwards bias is still assumed. $NYMO and $VIX are bearish, but do have room for a little more bullish movement. $VIX has had 6 down days straight, and that is not bullish heading forward short term. % of issues over 20 day is something like 80%, although it's not right in front of me at the moment and that is the highest in 6 months.

What I suspect will happen is today or tomorrow will offer some relief to the bulls, but I do not think we can post a strong leg higher until we work off more short term overbought conditions. Maybe a little grinding action upwards is more likely. For XIV players, VIX:VXV is .82, which means the conditions are overall ripe for gains even if SPY is flat, as it mainly has been. Just watch out for heavy losses on the SPY, since XIV is not bulletproof.

If I was a day trader, I would be looking for opportunities to buy dips and sell rips, but since I am not, I don't know if the market has a full 3-5 days bull effort in it yet, so I would like to see a better set-up. If you are more flexible than I am, give it a try. Good luck and good trading!



Leave a Reply.