$SPX Daily, 05/09/2014: More evidence of momo loss.

SP:SPX   S&P 500 Index
254 3
+40pts & 1.6% on the year.
-5.57pts & 0.29% on the month.
-2.66pts & 0.14% on the week.

We have been moving back and forth between the lower and upper consolidation zones since mid-December, 2013. The percentage difference between $SPX & its 250EMA continues to shrink as momentum continues to slow. But key is that while $SPX appears to be running out of momentum, it has not run out of momentum. Earnings season has peaked and is on the decline with most of the important stocks having already reported so the chance that some major upside earnings beat is going to push $SPX to new highs is reduced. However, we are closer to the highs than to the lows and because Chaikan Money Flow made a new high Friday and because On Balance Volume remains strong I fully expect we'll see new highs in the coming week. I think any new highs, especially at this time of year, are likely to be a head fake but the market may decide otherwise.

The 5EMA on the $VIX is at 13.32 and usually gives a pretty good signal when it gets down near 12.5. This has been range bound for several weeks but should $SPX push to new highs then that would likely drop the $VIX 5EMA into the 12's, which would be cautionary. Just something to watch should we actually get new highs next week.

While I am not bullish at this time, except for a small position in TQQQ , I am not bearish , either. Out of all the various sectors that I watch, only RTH has a sell signal in the weekly time frame, having peaked in November, 2013. IWM is now about 12% off its recent highs but I don't have sell signal for it in the weekly time frame and until I start to get sell signals in the weekly time frame for IWM and others, then I just have to think that somehow the market will work its way higher short term, with emphasis on short term.

Be careful & GL in the week ahead.

Adding this 4 hour ES chart as an example of the near term predicament:

when in doubt short UN or UL when extended... even as a consumer staple, it can be short sweet as maple.
Thanks Curtis. As I have said previously, I simply cannot call market direction at this point. I'm staying long for now, but if the mega-cap divergence continues with RUT and COMP, I will have to trim my position back. Also, I'm inclined to take profits on rallies rather than add to positions.
CurtisM SimGlenn
Glenn, I really don't know what it's going to take for people to fall back in love with small caps and big tech. Each time these two sectors get a couple of good days behind them, then sellers come in. IWM is below all key MA's including the 200SMA so this is the weakest sector out of the sectors I consider most important.

And I agree, trying to make a market call, up or down, is almost impossible. I also agree with raising cash here as it is safe on the sidelines. Wrong or right, cash is king in times of uncertainty.
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