The S&P 500 Set a New High, but the Good News Is Fewer New Lows
Even as the S&P 500 sets a new high, the good news is that small-cap selling might be near an end. But with the CPI and FOMC tomorrow, the only thing certain is volatility. We look at APA, IWM, PEP, ABNB.
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The Market
By this time tomorrow we will have seen the CPI and had the FOMC meeting. You do realize that means whatever I say about today’s market is likely to be changed by this time tomorrow.
The new high in the S&P came with 56 stocks making new highs on the NYSE. Last week’s new high had 100 so it’s getting worse, not better.
The new high in the S&P came with another day of crummy breadth. In fact breadth has been negative for four straight days. And six of the last seven days. The McClellan Summation Index continues to head down and now needs a net differential of +2100 advancers minus decliners on the NYSE to halt the decline. The chart is shown below.
But let me give you some good news. The Russell 2000 made a lower low than Monday by eight points. Nasdaq did not make a lower low than Monday but came close. And the number of stocks making new lows did not expand. This is a small change. There were 137 new lows today vs. yesterday’s 175 new lows. Is the selling drying up? Maybe in some already down and out places it is.
Yet the banks broke badly today. The Bank Index was down two percent. The Regionals have been terrible but the big banks have held up. Until today. I have been eyeing this line as support for the Bank Index but I will say today’s action did not feel healthy and gives me pause.
One final statistic to report: the DSI for the S&P is at 83 and Nasdaq is at 81. We already know the VIX is hovering in the low teens. If they rally the market on a dovish Fed tomorrow those index DSI’s could push up to 85+ which I consider the yellow flag zone.
New Ideas
If energy is going to improve from here, APA APA should cross that downtrend line. A strong break of 29 and I’m dead wrong.
Today’s Indicator
The McClellan Summation Index is discussed above.
Q&A/Reader’s Feedback
IWM hasn’t really broken that uptrend line (black). If it can’t recapture that line in the next few days then I do think it is headed toward the blue line but this morning it tried once again to break and didn’t.
Pepsi PEP has support in this area so it ought to bounce from here but I would prefer for the chart to settle down and set up again. I think the best it can do is that 170 area for now.
That top in Airbnb ABNB measured to 140 and it got there in late May. For now I would think if it gets through 150 it will fill that gap around 155.
