NFTRH; Some US Market Leaders Diverging

As we have reviewed by various charts, several indexes are broken.  But the Internets, which we had noted could be a buy at 280 in a market bounce scenario, are not yet broken.  For reference, see NFTRH 378 and a post at Biiwii from this morning’s pre-market.  Here is the DJINET by daily chart.  This leading index is right at the would-be ‘bounce’ buy target.  The updated weekly charts from that post are at the bottom of this update.


Also, one of the most beleaguered indexes, the Biotechs, is green today.

btk daily chart

Meanwhile, SPX has dropped below the critical support area that you, I and everyone else now sees.  What a perfect time for a whipsaw and bounce.

spx daily chart

I am not trying to make light of this, and indeed this piercing of support could be a) a scout for future bear activity after a bounce manifests or b) a trap door to a crash, as we noted yesterday.  But SPX has not closed the day or more importantly, the week below 1870.  I still hold SPY, believe it or not and even added AMZN (again, ref. the post linked above and the chart below) in consideration of the ‘Internets’ view.  Yet I also hold GS and KBE short, with Goldman’s earnings ‘beat’ barely causing me to raise a pulse.  The EM short was increased yesterday on the bounce as well.

The bottom line is that this market is one for the ages.  I am and have been bearish for a phase and now a trend.  But I could feel more bearish than I do, considering the agony going on out there and the technical parameters that are snapping like twigs.  But I can’t shake the feeling that an over sold bounce can still come about, and the state of the Internets and Biotechs only supports that feeling.  I have balance in being short the relatively weak and long the relatively strong (but only for as long as the battered ‘bounce’ scenario holds out).  Any bounce could ultimately prove to have been a good tool for getting more firmly short the market, as the trend is bearish.

Shifting to opinion mode, I believe the market is simply doing what it should do in a phase where policy makers are pretending to be tough (i.e. tight with policy).  The market is croaking in the absence of the inputs that instigated it to begin with.  So that is a wild card as well.  Here we might recall Bullard getting on the mic in October 2014 and blabbing about the Fed’s ability to commit QE4 at any time.  Market sentiment is like a tinder box right now.  It wouldn’t take much.

Here are the weekly charts of AMZN and DJINET, as promised.

djinet weekly chartamzn