Just like yesterday, the market gapped up at the open but then traded around the opening price for most of the day. Basically, the markets are torn between a good 2Q GDP report of 3.8% and a lousy new home sales number. The first signals things are fine and the second signals the economy isn't fine.
On the three day chart, notice how choppy trading is. We get a big move up but no follow-through. That tells me the upward movement is technical -- traders buying on the open, but not enough excitement to continue bidding up the market during the rest of the trading session.
The daily chart shows two very narrow trading days. These are not good technical signs. They indicate a lack of excitement among traders.
Something I missed and which was mentioned on the WSJ Marketbeat blog was the transportation average's 50 day SMA crossed below the 200 day SMA a few days ago. So not only are the transports trading below the 200 day SMA (which is a bearish sign) the moving averages are moving lower and into bearish territory. These are not good technical developments.
Along that line, notice the following two transportation charts.
The railroad sector isn't in bad shape. It's just treading water, though.
Trucking is clearly in a major downtrend and has crossed below the 200 day SMA -- a very bearish sign.
Finally, we have the QQQQs. While they are advancing, the candles are very weak, indicating a reversal to retest support will probably happen soon.
