Thursday, May 28, 2009

Making Sense of the Current Stock Market

Here we see a compressed 60-minute chart of the S&P 500 e-mini (ES) futures. That market is itself compressing, as we've been seeing lower highs and higher lows for much of the month. That has kept us in a range bound mode across many of the S&P sectors. I notice that today we registered 835 new 20-day highs across the NYSE, NASDAQ, and ASE, against 474 lows. That's a far cry from the 2862 20-day highs and 224 lows recorded on May 4th.

Should we see new price highs among the large cap indexes in the days to come, there is a good likelihood that those highs will not be confirmed by commensurate strength among the individual stocks and sectors. Until we see evidence of broad market strength, I am treating the current price action as part of a larger topping process and leaning toward fading all moves as long as we remain in the range environment.


microleader said...

Love your posts. Not sure if this is up your alley or not, but can you explain the disconnect between SRS and URE that has occured today? They are no longer trading as inverse corollaries it seems.

Chris said...

SRS -4.5%
URE +1.98%

That pretty close to inverse.