Wednesday, April 29, 2009

Stock Market Update - April 29, 2007

This market continues to defy gravity. Another up day. The total up volume for the day on the NYSE was 88% and the total net inflow of money for the DJ US Total Market was just under $2.4 billion. The Financial sector had the largest inflow with around $942 million. HOWEVER, the ETF for the S&P 500 (SPY) had a net outflow or selling on strength today of over $123 million and there were a number of other ETF index stocks that were listed right behind it with cash outflows (all the market data was obtained from The Wall Street Journal).

Two setups are possible ... as I stated this past weekend the market is at an important crossroad. First, the commercials are unloading the Index based ETF's and are headed into individual stocks noted by the cash inflow data. Second setup ... the commercials are selling the Index based ETF's and are looking for a correction. I believe if we see a heavy volume day with a strong price move up ... then we are off to the races ... and I will have to look for a quick entry price and not chase this thing up. One would need to watch the price and volume data for the clues to this move. Note on the above chart the money flow indicator has moved back to a cycle low. Also, one can make the case that volume has dried up and there are not any new buyers in this market ... and we are going to move sideways or down over the next week or more. Either case one would need to pay close attention and I will be the first to communicate any change on this blog.

I am enclosing another 60 minute chart of the Dow to show that on a current short term basis most all of the indicators are approaching overbought. Note in yesterday's blog I pointed out that I felt today would be an up day based on the modified Tick Data indicator in red above ... the assumption proved correct.

I have enclosed the 60 minute chart for the ETF SPY that measures the S&P 500. It also shows everything topping and the money flow indicator in blue is moving to a peak for the very near term. Just another view the market may see some weakness in a day or two. It may be the point were one would need to make an entry on the long side if the above assumptions prove correct on the weakness. Remember ... use your stops wisely to protect yourself.

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