The DOW made it 9 up days in a row yesterday and for once, all the other Indexes followed suite and traded higher also. However, even though yesterday action was positive, the markets breadth figures showed 1500 issues lower and 1400 issues higher on the day and that ain’t right. Over the past few weeks, while the Indexes have continue to grind higher on light volume, the markets breadth figures, are turning negative and although this is not usually a market killer, it is a growing concern. For example in July, 75% of S&P components were above their 50dma, now that number has dropped to 60%, for the NASDAQ, 67% of its components were above their 50dma in July, now that number has dropped to 47%, now these numbers are not issuing an a imminent signal of danger, but it is something that has to be watched.
Technically the DOW remains overbought and extended, so it’s only a matter of time before someone, somewhere, hits the sell button and takes some profits. The S&P and NASDAQ, after consolidating for the past 2 weeks, are trying to trade back to their highs at 2484 and 6460 respectively. The market lagging Russell and Transportation Indexes Stochastic patterns, are turning up, so there’s a good chance of them rebounding and heading back toward their highs at 1450 and 770. Overall, the DOW needs a correction, the S&P and NASDAQ have some room to the upside, but the Russell and Transports have room to run and that would help “fix” the markets negative breadth issues.
Overnight, the Global markets were mixed, as China’s Import/Export numbers missed estimates and in early trading our markets are off slightly. The Yield on the 10 Yr is flat at 2.26%, the Dollar is falling and that has Commodities higher.
We have no news of interest today, but we do have a tidal wave of earnings out, so pay attention.
Today’s Early Markets
DOW Futures— down 8.00 London – down 9.58
S&P –down 100 DAX – down 2.56
GOLD—$1270 Dec Nikkei — down 59.84
OIL— $49.50 Sept HangSeng — up 164.78
DOW RESISTANCE 22,140 S&P RESISTANCE 2484/2488
DOW SUPPORT: 22,000 S&P SUPPORT: 2468
$NASDAQ RESISTANCE 6405
$NASDAQ SUPPORT 6360