Improved Internals

The one thing that has characterized the month of May is the clear drop off in volume. From May 10th and on, this can be observed in the spider market such as SP 500, 400, 600, DIA, SMH, QQQ.

What this seems to "imply", is that "would be" sellers are not as aggressive as before - a holding pattern, or due to important support levels? For clues, the percent number of stocks above their 200 DMA within NYSE, SPC and Nasdaq, has indeed showed an improved posture as of late. NYSE has managed to confirm a W-bottom by penetrating the resistance level of 48%. This is the first time we can see a reversal pattern taking place since the initial decline in late January. Additional follow through would at "this point" be regarded as moderately bullish.

Similar fashion is illustrated in the large cap arena. SP 100 has narrowly fluctuated between 48% and 51% until yesterday, when it jumped from 49% to 53% - So, going into June with the "expected" rate hike from the Fed, as well as positive indications of Q2, it would not be a surprise to see the market setting up the challenge against key levels - 1120 on SP 500 and 10200 on DOW.

Should the price of oil take a breather, this would just add to the "possibility" of more bids for equities. Point of interest, note the beginning of a negative relative strength divergence in non-cyclicals and health care. Pockets of strength can be found in the financials, such as banks, currently testing the 200 DMA.

/ I.V

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