BarroMetrics Views: At Inflection Points? II

Yesterday we looked at the DX and concluded the DX was ready to rally. The jury is still out despite the fact that we had a bullish-conviction bar: the volume was on the light side and we have Non-Farm today. A ’surprise’ figure will probably move all the financials.

Today, we’ll look at the S&P - all figures basis cash unless otherwise stated.

Readers of this blog know that I favour a 1966 to 1982 type scenario (Figure 1).  This calls for a move to the Primary Sell Zone 1536 to 1443. If the move is likely to fail it will be at the Death Zone (1291 to 1167) (Figure 1). However, this does not mean we won’t see a correction in the 13-week timeframe en route to 1536 to 1443.

I believe we are close to one now. The conditions today are akin to the conditions of March 2009: we are seeing new highs (lows in March) without volume/range confirmation.

The latest is yesterday’s price action:

We saw an up day on normal range and volume. That suggests bullish continuation. But when we look at the Market Delta end-of-day, we see that the net buying volume was very light. The Split Delta is even more instructive: as the market made new highs, the sellers came in and capped the rise. Note that the latter half of yesterday shows net selling volume GREATER than the first half’s net buying volume.

There is one element retraining the bears: yesterday’s net selling volume was also  light.

We probably need to see a catalyst. This could come tonight if we see a number perceived to be bearish.

FIGURE 1  DJIA 1966 TO 1982

FIGURE 2 DELTA E-O-D

FIGURE 3 DELTA SPLIT

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