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Thursday, September 13, 2012

Daily update 9/13

Well they went and did it.  I guess we will so how well this works out in the long run.  Commodities took a jump as expected in the case of new QE.  If oil and food prices keep going up it will cause problems for the global economy.  Maybe it will be different this time.

Here is a look at the daily SPX chart.

We have a big blue bar on heavy volume.  I would say the shorts have been run out of town pretty good now.  There was no surge in the last 15 minutes which means there probably was no big buy imbalance on the close.  After a day like this with heavy volume after a long rally there is always the possibility of a short term volume climax.  We are getting pretty far away from the 50 SMA now.  The weekly chart is also above its Bollinger band if we close up in this area tomorrow. 

Here is the COMPX daily chart.

The COMPX got a little further above the break out line then the other day.  None of the other major indexes I watch broke out yet.  However, the Russell 2000 is getting close now.  The transports were muted today, but they ran up some the last few days.  They are now in the area that has been resistance the last few months.  We will see what they do. 

The real question is what happens now.  The major indexes are in a short term over bought condition and the news is all out now.  One longer term bullish scenario would be for the major indexes to consolidate while the lagging indexes catch a bid and break out to new highs.  The bearish scenario would be a sell the news reaction in the market and the major indexes fail their break outs.  Now that most of the shorts have been flushed it will take new longs to push the market up from here.  I don't know whether people are confident enough to do that or not.  I guess we will find out.


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