Cover Before June, Not A Moment Too Soon
All hopes for the 50 day moving average buy program quickly evaporated this week, as more and more distribution began taking hold. Our Heat Gauge stayed solidly in the SCORCHING range for most of Thursday’s session, even taking into account the bulls last ditch rally effort in the final hour of trading.
The good news for the bulls, though, is that overall volume reached almost 20%, which is often a sign that the move may be exhausted, especially when markets are at prior support levels (SPY 280 may have previously been a “psychological” level, but there’s a lot more riding on it now). Whether the bears are just taking a short breather remains to be seen, although with 4 distribution days already under their belt this month, covering before June (and not a moment too soon) seems the likely scenario. -MD
Sentiment: SKITTISH – Market distribution is heavy and aggressive and big institutions are selling to preserve their capital.
Volume: 19% – Today’s volume was higher than the previous session.
Real Feel: SCORCHING – Bears dominated the session with a minuscule amount of buying under the surface.
Cycle: BEARISH I – Retail investors are uncertain and very light in their holdings.
Portfolio: HOLD – The market is in a period of indecisiveness and the best place is on the sidelines.
Next Day Move: UP – The probability that SPY will close positive in the next session is 59%.
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