Southridge Capital | Bob Colby CMT Comments About The Market

Summary: clearing out protective sell stops below the lows.

S&P 500 Composite (SPX) broke below 7-month lows on a both an intraday and closing price basis, thereby clearing out some protective sell stops below the lows.

SPX price momentum oscillators, such as RSI (14), MACD, and Stochastics, are more deeply oversold. But they are not quite as oversold as they were a few weeks ago. Thus, they show bullish divergences.

The Dow-Jones Industrial, Transportation, and Utility Averages tested and held previous 2010 lows.

The Cumulative Daily Advance-Decline Line also held above its early June low.

VIX Fear Index jumped up to 35.39 on 6/29/10, up from 22.87 on 6/21/10. A high and strongly rising VIX suggests increasing bearish sentiment.

Consumer Discretionary Stock Sector absolute price crossed below its 200-day SMA and broke support at 30.34 on 6/29/10.

Industrial Stock Sector absolute price whipsawed back below its rising 200-day SMA again on 6/28/10 and remains neutral.

Technology Stock Sector absolute price fell further below its rising 200-day SMA on 6/29/10.

Utilities Stock Sector Relative Strength Ratio (XLU/SPY) rose above the highs of the previous 4 months

Southridge Capital Comments On New Consumer Confidence Index

The Conference Board, a private research group based in New York, said Tuesday that its Consumer Confidence Index dropped almost 10 points to 52.9, down from the revised 62.7 in May. Economists surveyed by Thomson Reuters had been expecting 62.8 for June. June's reading marked the biggest drop since February, when the index fell 10 points. The index had risen for three straight months since then.

Both components of the index — one that measures how consumers feel now about the economy, the other that assesses their outlook over the next six months — dropped. The Present Situation Index decreased to 25.5 in June from 29.8 in May. The Expectations Index declined to 71.2 from 84.6.

Southridge Capital on Retail

Retail took the brunt of the selling the last 5 days (in Red below) falling 2 or 3 times as far as the SPX in 5 days. There may be a bounce, but Southridge believes that it could continue as we approach EPS and confession time for companies. Charts below show that the XRT has broken through major LT moving averages.