Wednesday, June 01, 2016
It was a one day reversal to the upside as the Dow opened over 100 points lower and finished the day up 2 points. The advance/declines were 2 to 1 positive and the volume was light. The overall market was slightly stronger than the Dow. The summation index continues higher. Very good breadth for a market only up a couple of points. I'm still looking for higher prices in the near term despite the technically overbought condition in the major indices. Tomorrow should be a waiting game on the employment report due out of Friday. GE was off 1/8 and the volume was light. Gold was down a few bucks on the futures despite a drop in the US dollar. The XAU and GDX had slight fractional moves one way or the other on very light volume. I'd expect gold to move on the employment report as well. Mentally I'm feeling OK. The small caps continue to be relatively better performers and I don't expect any major decline as long as that is the case. The S&P 500 is stalling here at 2100 but suspect that we will get through there in the coming days. I could be wrong. My thinking is that there will be better resistance at 2125. However we know that the market will go where it wants. The Dow has managed to hold above its 50 day moving average as have other major indices. The only problem here is the volume which has been pretty weak on the rise. I do not trust light volume rallies. So where I do think we can go higher in the short term, I don't think this is the start of a leg up that breaks out. Unless we get a high volume rally through 2125. I don't see that happening just yet. Patience is still the theme here and perhaps now some SPY June puts if we move higher. Foreign markets were weak overnight and we followed their cue early. We'll watch the overnight developments and expect a quiet session tomorrow.