The Market’s Push Higher Will Be Limited

It’s another day when positive index headline numbers mask internal deterioration. The indexes fought back from early losses from disappointing home sales data and UPS (UPS) numbers couldn’t be spun positively…no way, no how.

As you can see volume was average. Breadth in the NASDAQ (^IXIC) reveals a very narrow advance with volume concentrated in just a few names like Apple (AAPL) while the rest of the sector suffered.

Let’s remember the monthly DeMark charts I put up a few times this year. The sequential 9 count is generally impressive from monthly views and often marks an end or pause to any trend. Below you can see these counts clearly on SPX in 2007 and again just recently. They’re not perfect but generally should be respected. Finally, these counts appeared on most major indexes in the same manner.

I get a lot of comments and emails about FAS, FAZ, UYG and SKF. If I were using the most volatile of the leveraged products I would day-trade them and not sit on them despite whatever fundamental views you might have. You can find many times when leveraged issue work well over extended periods but for me that might only be one-three weeks.

That’s a wrap. Folks who just read the headlines will note markets closed higher today. The DJIA (^DJI), the window dressing for tourists, is what they’ll pay most attention to. Beneath the surface things aren’t as good as they might seem. Until we get better participation the market’s push higher will be limited.

The impending so-called bank stress tests may have some impact one way or another. Given the desire by authorities to make everything look great, you’d be right not to trust rosy reports.

Let’s see what happens.

Disclaimer: Among other issues the ETF Digest maintains positions in: SPY, MDY, IWM, QQQQ, XLF, XLB, XLI, XLY, IYR, DBC, USL, XLE, DBB, DBA, MOO, EFA, EEM, EWJ, EWA, EWY, EWM, EWZ, IFN and FXI.

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