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Friday, May 18, 2012

Daily update

There is not much new in SPX today.  It is still going down, still oversold, and still no sign of a bounce.  There may be a big one day short squeeze at some point, but I do not know where that will start from.  Possibly the daily 200 SMA in the 1278 area.  I want to show the Financial Conditions index again because it has deteriorated considerably this week.

It took a considerable dive this week indicating financial stress is picking up.  Here is a chart of HYG a high yield bond ETF.  Notice the similarity to last years sell off in this chart.

It was clearly a risk off week.  The technical damage continues to get worse.  It certainly looks like we are in for a prolonged period of higher volatility.


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