The Cumulative Tick itself was negative.
Small caps experienced a small short squeeze, which is a typical reaction when the NQ8 bounces.
The NQ100 showed accumulation, but most probably only because of the NQ8
We can see below that the smallest 250 of the 500 SP500 stocks experienced a negative Money Flow yesterday. This also indicates that the market was only supported by the most liquid giant stocks.
Both the US$ and the Euro seem to be close to revert again (US$ higher and Euro lower.)
While I had been Euro bullish since March due to stronger European growth perspectives and political stability in the Euro zone, I am now more US$ bullish for the following reasons:
- NK situation that will not disappear soon and which exacerbates international relations with China/Russia - increasing insecurity.
- The potential of a tax deal in September that will mostly focus on repatriating cash held abroad. Such a deal is positive for the US Treasury and could finance minor tax cuts (which Obamacare non-repeal cannot finance anymore.)
Of course a Yen reversal is also very US$ - and somehow US equities - supportive.
Oil is still negative here, which does not help the energy sector.
The TBTF banks also bounced yesterday, but that bounce attracted sellers. This is not too good as a measure of sentiment.
Conclusions:
I do not think that yesterday's bounce will have legs past the end of this options expiration week.
I still closely follow the IWM/SPY ratio and bought some IWM calls on the cheap yesterday, hoping to be able to sell them by week's end when/if the ratio reaches the top of its envelope.
