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Tuesday, July 22, 2014

Daily update 7/22

Yet another gap up to start the day.  Yet again there seemed to be no fundamental reason for it.  Lately it seems like if the world doesn't end overnight the market celebrates by gapping up.  Here is the daily SPX chart.

SPX made a fractional new high today, but failed to make a new high close.  There was not a lot of buying interest after the open.  This was the third close above 1980.  The market pulled back the other two times.  Will the bulls hold tight and push higher or fold again?  Lets take a look at the futures 60 min. chart.

I marked the four upsdie gaps we have had above 1970.  The only one that got any buying interest to speak of was the first one on 7/3 which was a half day.  I am sure that means the big boys were out of the office that day.  With nobody around to sell the market continued up and made the highest close to date.  None of the other upside gaps carried very far.  We clearly have resistance here.  Here is a look at the overnight futures chart.

The futures broke the upper trend line overnight.  Despite the price pattern tightening up and an over sold breadth condition they were unable to make new highs and stay there.  Total volume was more then 10% higher then yesterday, but very little upside progress was made after the open.  This did not really look like a launch to me.  It appeared more like people selling into strength instead.  So we have horizontal resistance here and the uptrend line just below.  If we pullback again I would think we would end up breaking that trend line.  With all the divergences we have in place I would expect selling pressure to pick up.  The bulls need to blast through this resistance pretty soon.

This is an interesting chart.

So long term investing is now around a 6 month holding time.  Is that because of the speed at which stocks move these days?  I knew holding times had dropped considerably, but I had no idea of just how much.  I am not real sure I understand this.   This seems more like gambling then investing.  I guess the trader comment the other day that the 1.2% drop from an all time high was a long term investing op was not so far off after all!  This does not seem like a good thing to me, but it makes me wonder why volatility is so low.  Are people just selling to the next person at a higher price?  If that is the case we are in serious trouble.  If a lot of the stock holders at the end of this bull market just bought the stock in the last year or less they will have a high cost basis.  It would not take much of a decline to cause some serious pain.  I am sure it is silly to even mention that the bull market will end some day.  We all know bear markets have been ended permanently by the FED.


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