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Tuesday, July 31, 2012

Daily update 7/31

Did we start a pullback today?  Here is the daily SPX chart.

Indecision yesterday was followed by more indecision this morning.  However at the close we ended up below yesterday's low.  I think the more significant chart is of breadth.

We have completed negative crossovers again.  This is the first peak where the McClellan oscillator was under 100.  That lack of strength does not give us particularly good odds of a retest should the pullback continue from here.  This looks like an exhausted market to me.  At the same time, they have been parading a lot of people on Bloomberg TV telling me what a great time to buy it is.  This looks like it is now time to embark on the test of the June low I feel like I have been talking about forever.  We will have to see what happens after the FED announcement tomorrow.  I am afraid we have used up so much buying power on this rally that the low will not hold for long if we do get back down there.


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