I'm going to start out with the S&P 500. The interesting news today was not that the S&P 500 was up over 10 points but all the other data that goes with it. The broader market today only had an inflow of $147 million and the Financial sector took in $277 million after yesterday's mauling ... BUT ... the bigger story is the ETF for the S&P 500 (SPY) actually had an outflow today of $255 million dollars. Also, the Dow was up over 100 points today but there was a net outflow of money of $60 million. Close to $400 million now has moved out of SPY over the last week or so. Folks the big money has now left the building. I would really think pretty hard at this point before entering into any new long positions or adding any new money on current long positions. One may consider taking some profit in long positions since the upturn March 9th. You may get a chance at a cheaper opportunity over the next few weeks. I know I will be looking for one and waiting for one. To make a stronger case take a look at the charts below.
Note that the NYSE Summation Index is around its highest point in the last 18 months. All indicators are pointing to some type of top. Please note this tends to be a somewhat lagging indicator and doesn't generally peak and roll over until after the market has made its top.
Still not convinced ... take a look at the NYSE Bullish Percentage Index. Not at its highest but closing in on the high mark over the last 18 months.
I have saved the best for last ... the NYSE Percentage of stocks over their 50 day moving average. Can we say nosebleed? Again, the index is at its highest or almost highest level in the past 18 months at 85% of all stocks over its 50 MA.
Note on all three metrics ... the S&P 500 is in blue, the Frye indicator is in green, the tick measure is the multi-colored red and black line (black is up days and red is down days).
This market may not roll over for some type of correction ... but one has to say it looks like a top, it smells like a top and it tastes like a top ... so the question begs .... Is it a near term top?
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if you think we may be near a top, which i dont disagree with, where do you think the bottom support may be?
ReplyDeleteYou know people are always trying to tell you its this level or that level. Well my thoughts are let price dictate were the bottom support is going to occur. I don't believe folks with any great degree of accruacy or consistancy can call bottoms or tops. What I can tell you is to watch the indicators along with price and these items can give you pretty good ideas on when the time may be to step in or out. Always use stops to protect yourself.
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