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Friday, August 2, 2013

Daily update 8/2

Rally chasers = profit takers.  Today was a draw.  Here is the daily SPX chart.

I sound like a broken record, but SPX stopped at the lower red channel line yet again.  At least for bulls it is sloping upward.  I don't think today tells us a lot.  A lot of tops have a thrust and a narrow range bar, but a lot of times that same pattern continues on.  There are still all kinds of divergences in the market internals.    A close back below 1700 would be a warning sign.  Based on the charts I showed last night with new highs on negative breadth there probably is at least 50/50 odds of this being a top.  With the many divergences in the internals it is possible the odds for a top are even higher then that.  To stay up here it will require rally chasers to buy the highs.  We will see if they show up.

TLT is going crazy, LOL.  Up and down.  Here is the chart.

After rallying nicely from a test of the 7/5 low it tanked again the next day and closed at new lows.  However, today it gapped up and rallied more through the day and is back above that 7/5 low again.  This still looks like it is trying to bottom to me.  Will it succeed?  Will there be ramifications for stocks if it does?
The stock market accelerated up about the time TLT topped last July.  I have been thinking that if it does make a bottom there could be some rotation out of stocks and into bonds.  That idea comes from the old days when there used to be rotation between those asset classes by Wall Street firms.  Today we have the so called risk on and risk off trade.  I am not exactly sure how that relates the two asset classes anymore.  Just in case TLT bottoms and there is an affect on stocks I will keep an eye on it.  Upside follow through next week would help make the bottom look a lot more possible.

Chart practice has been updated with APOL the stock tonight.

Have a great weekend all.

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