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Monday, November 5, 2012

Daily update 11/5

Not much action today and very light volume.  Here is the daily SPX chart.


This looks like a holding pattern to me.  I find it interesting that the lows are above the key 1400 support line.  We have yet to test that level.  I have noticed this type of behavior occasionally where the market approaches a key level rather slowly, almost with trepidation.  This looks a lot like a consolidation with intent to go lower. 

Check out the breadth chart.


 Both breadth charts are negative.  During this consolidation the 10 DMA breadth chart has actually gotten worse.  I think bulls need to prove themselves here.  The bears more then proved their willingness to sell at higher prices on Friday.  Tomorrow could easily be another nothing day while waiting for the election.  Hopefully we will find out who won in a timely fashion!  If there is no clear cut winner right away I would expect a sell off.

Speaking of elections, be careful jumping to conclusions.  Remember 2004.  The Ohio exit polls said Kerry won, but that ended up not being the case.  I guess people don't always admit who they actually voted for when leaving the polling place, LOL.

Bob


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