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Wednesday, August 6, 2014

Daily update 8/6

I want to start with a weekly chart of SPX.

There were two trend lines that came together at the top.  Hitting those lines coincided with the collapse of market internals I talked about all through July.  Notice the first two points of contact of the uppermost line were followed by the biggest corrections of this bull market.  The lower trend line stems from the 2011 low.  Obviously that is an important line of support.  Does it hold or does it break?  It looks like an important inflection point.

SPX opened at the 100 DMA today and bounced right from the open.  Here is the daily chart.

Since the beginning of 2013 people have been buying the pullbacks to the 100.  Usually people do something until it stops working.  Yesterday and today the TRIN was up near 1.5.  That might entice some buyers.  The market had a chance to break down as futures opened below the recent lows, but it didn't.  Instead of a double bottom like we had yesterday we now have a triple bottom.  We clearly have some support.  I guess we will see if the bulls show up with a little more force the next couple of days.  Lets look at the futures chart.

We now have 4 bars all closing in close proximity.  A sign of bulls and bears fighting it out in close combat.  This is in position to turn up if the bulls are willing.  Probably all up to overnight news again.

The Dow continues to show relative weakness to SPX.  It is almost down to its 200 DMA.  It has been under performing all year for some reason.  The markets in Europe got really whacked.  Here is a look at France, Germany and the U.K. with SPX.

I assume this is because of the situation with Russia.  The economic data coming out of Europe is showing a slowdown.  If that continues it is likely to become a drag on the U.S. economy as they are a big trading partner.  These markets have pretty much all been rallying together since 2012.  Will the U.S. follow them down?

I thought this was interesting.


Apparently a lot of the new car sales these days are going to leases.  Is this happening because people are uncertain about the economy or some other reason?  Since most leases are for three years that should mean there will probably be a lot of used cars coming on the market starting early next year.  That should put at least some downward pressure on used car prices if anybody needs one.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.