daasmt's  Instablog

Markets Current and Outlook
The Markets lost $268 billion in market cap yesterday. The Market Distribution Chart for the SPX (58.60%) fell to Little OverBought (OB), the NYSE (44.1%) fell to Little OverSold (OS) and the NASDAQ (31.5%) remains Mostly OverSold (OS). The SPX distribution chart remains "to the right" of the NYSE, a Positive signal (see page 4). The SPX option premiums are signaling Positive. Economic News out Friday: International Trade, Import & Export Prices, Consumer Sentiment. The signals for markets on Friday are Positive.                                                                                                                                           

Comments: I have been highlighting the NASDAQ distribution would likely come in line with the SPX and NYSE in terms of %OB. One scenario would be for the NASDAQ to outperform, which we saw yesterday. Also, the NASDAQ volume was much higher on average at 101.18% of the 25MA versus 81.28% for the NYSE. With many of the NASDAQ sectors trading near 52 week highs, it makes sense that the NASDAQ would have trouble moving higher. In other words, the stocks reached new highs and have mostly gone sideways or slightly down, which brings the 25MAs to higher levels and slight weakness keeps stocks below the average. If that scenario continues, then one might expect the SPX and NYSE stocks to pullback to bring the distributions in line. I would prefer to see that happen, because it makes the near term Buy signals much easier to call. Keep in mind, that if we are going higher for the year, my current expectation, then the pullback would be quick.