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Monday, December 2, 2013

Daily update 12/2

Down on the first day of the month.  How odd.  Those days have been starting with big gaps to the upside most of the time the last few years.  Here is the daily SPX chart.

SPX has a five day stall going on.  It again tested the highs of the last several days, but found no buyers willing to push price.  It then sold off in the afternoon.  Lets zoom in to the SPY 60 minute chart.

The horizontal line marks the close of the last bar today.  As you can see it was below all the hourly closes since 11/25 (the start of the stall).  It closed just below the 50 SMA.  An hourly close below that last bar's low would confirm a break of that MA.  Here is a look at the latest breadth chart.

Both breadth indicators had negative crossovers today.  This is the fourth time the 10 DMA chart has crossed negative since 11/1.  The other three times did not really spark a pullback.  Will it be that way again or is the fourth time the charm for bears?  There were 152 new highs and 62 new lows.  The new lows remain elevated for a market at the highs like this.  Very odd.

The sentiment picture is really, really bullish these days.  Check out this chart of the II number of bears.

This is the lowest number of bears in twenty five years of data.  I find that pretty stunning under the circumstances.  Check out the latest NAAIM survey.

The NAAIM survey is back over 100 again for the second time this year.  There were no respondents net short this time.  In fact the most bearish response from the survey was 50% net long.  The only other time we had numbers like that was on 1/30/13.  SPX crept higher from there in early Feb., but had a pullback late in the month that took price below the 1/30 level.  One major difference between now and then is the market internals are much weaker this time.  The McClellan summation index was over 3000 then and is only 20 now.  The number of stocks above their 200 MA was 79% while only 54% now.

We have extremely bullish sentiment with weak market internals.  One would think that would be a recipe for a pullback.  So far that has not happened.  Is it time or will the bulls come in to save the day again?  A close below 1800 would be the first sign we might be headed for a pullback this time.  Below 1775 and I would expect the selling to pick up considerably.

Chart practice has been updated with GS the stock tonight.

Interesting article on how the week after Black Friday can indicate market direction for months.


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