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Friday, October 18, 2013

Daily update 10/18

The buying panic continued for a third day.  This reminds me of the old joke I heard many years ago.  The people that bought on the first day were smart, the people that bought on the second day were lucky and the people that buy on the third day are bag holders.  Here is the daily SPX chart.

SPX closed above the upper trend line.  That pretty much matches what happened at the recent low.  There was a little bit of poke through then a reversal.  I think this is going to have a hard time staying above that upper line.  Price is extremely extended in the short term for one thing.  A lot of times news induced moves are reversed for another.  The last three days of panic buying were sparked by news the U.S. is not going to default at this time.  That sure sounds like a good reason to buy everything in sight to me, LOL.  That move started around 1700.  I suspect there will be a pullback to there in the not too distant future.  There were 463 new highs today.  That is the most since back in May.  There is a reasonable chance this was a buying climax.  Until we get a down move lasting more then 5 minutes it is a bit hard to judge exactly what is going on.  Was this a final blow off move or the start of a big leg up?  Listening to the TV it would certainly seem that the majority are in the camp of blast off.  Time will tell if they are right.  I am a little skeptical at the moment.

For early next week this market is very extended.  A pullback seems likely to me.  I will be watching that upper trend line to begin with.  The price action over the last few months is very sloppy.  There are not clear cut support and resistance areas.  The 1700 level has not held on any pullback from the highs.  If we test that this time will it hold or fold?  Stay on your toes.  This market has done a lot of sizable reversals lately.  I don't know if we are past that or not.

Chart practice has been updated with JNPR the stock tonight.

The market and sector status pages have been updated.

Have a great weekend all,

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