Too early but, NYSE Breadth Divergence

Yesterday's sell off was not very intense, but today's sell off has even milder negative breadth readings so far. We may get a large cap rally to final highs from here till the end of the week, but perhaps SPX 1325 first = 20 dma. NDX and nadsaq are also under performing the sell off. Unfortunately, not enough bear fuel though. RUT is still outperforming, any large cap rally from here will be a terminal for EOM. Seasonally, end of July is usually bullish, but the debt issues are not resolved, usually the bullish effect is due to Congress concluding its work about now (not the case this time). But, you will never know, perhaps they announce a deal before the end of week. But, a long trade would not be based on this information.

Edited by arbman, 26 July 2011 - 09:25 AM.

Large caps finish last, as you know. Overall, this is not encouraging. Large caps and oils leading is a rally finisher-not a starter.

Yes, I was looking for a terminal rally, but I was expecting it without such an intraday rally back to a doji. We may already used up any little bear fuel and it is all call buying now. Currently, the banks and tech are doing better, this cannot be very bearish, but the market needs bearish speculation and is not getting...

Edited by arbman, 26 July 2011 - 12:30 PM.

I think this drip drip will end with an huge downside action, nobody is buying protection... It needed to sell straight down to SPX 1320 and load up the puts to squeeze back up with the breadth divergence a bit. Instead, it kept bouncing at the middle of the day, clearly this is luring more call buyers than put buyers, now the bull continues to collapse under its own weight.

Edited by arbman, 26 July 2011 - 02:47 PM.