Our current stock market is like a mountain climber near the summit, but not quite there yet. It is trying to hold and still ascend but the footing is treacherous. This lack of enthusiasm makes me wonder if the institutions are already fully invested. The Standard and Poor’s still held within the 1350 to 1375 box as of Monday. Patience is wearing thin for both the bulls and the bears. A rarity, whereby both the bonds and the S&P were in the red took place. There has been a true absence of normal indirect correlation for several days. And the situation exaggerates even more as I speculate.

Tuesday’s action had all the definitions of a trend down day. The institutions were actually sellers. The short covering rallies were nonexistent. Those who persevered with selling got rewarded with lower lows as the day progressed. Mark on your diaries as a potential change in market mood. I discuss the box set up in detail at my seminars and this is a prime example of a box breakdown of support. Finally this heavy market plunged off the skyscraper for once. The bonds have not exhibited a buying frenzy as the equities demonstrated the worse day in a while.

The overall stock market in the intermediate time frame is showing heaviness. Intraday trading has the strength of rallies not being accompanied by the normal internals. Some notable absent internals are the lack of consistent high plus NYSE tick and seeing short covering with a vengeance. Many times a heavy market needs a catalyst to change the trading environment. The bonds were unable to make a higher high Wednesday from the previous day’s high. Every rally was met with selling, which generally means that quick programs are pulling money from the bonds to fund the S&P rallies. The late afternoon saw the bonds try to attack the upper part of the intraday range, but was quickly driven downward. The bonds are in a quandary needless to say.

April delivery for Oil rose 82 cents marking at $107.40 a barrel on the New York Mercantile Exchange. Throughout the week it had a 0.7 percent gain and 8.7 percent so far this year. However, Oil might drop next week when Iran negotiates between nuclear powers, which may alleviate tensions that have elevated crude prices lately.

Friday morning was the 3rd anniversary of the bull market rally subsequent to the financial crisis. Employment news was better than expected which prompted a move in the S&P. It allowed a move through 1360, which made higher highs on the day. But as the afternoon progressed the vitality in the S&P became less and less. If a news item is unable to sustain a move then generally, that is an example of short covering with minimal new long buying.

The last three days of the week provided the bulls with new vitality, but is it borrowing from the futures for the present. I think that is an irony, as all the Federal Reserve ever does is borrow from our futures to try and fix the short term. If indeed this is the case, the future reckoning will even be more severe. There was not a momentum building throughout the day. Instead we saw energy waning; a sign an upside move is maturing.

 

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