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Tuesday, September 2, 2014

Daily update 9/2

The volume picked up a good bit, but we still didn't go anywhere.  Here is the daily SPX chart.

Today was a hanging man bar.  If you look at the SPY daily chart it shows back to back hanging man bars.  Thanks to a late day buying spree SPX managed to climb back above 2000 at the close.  It has had trouble staying above that in the morning though.  The last two days there was some actual sellers up there as opposed to just a lack of buyers.  However, the last two days also show there are dip buyers out there ready to swoop in on weakness.  Which side runs out first?  We actually had 236 new highs today.  That is the first time over 200 since the last 100 DMA bounce and is a sign of strength.  Will they keep on buying?  Here is a look at the futures chart.

We can see that green price bars are not seeing any follow through yet.  We are still in consolidation/pullback mode.  So far price is finding support at the 18 SMA.  Not much else to say here until the pause ends by breaking out decisively or breaking that 18 SMA.

I keep hearing a lot of talk about people expecting big news out of the ECB on Thursday.  I suspect that is a good part of the reason the dip buyers keep piling in.  I have no idea whether the ECB will disappoint or keep everybody happy.  However, that could make for a muted day tomorrow as everybody sits around waiting to see what they do.  We could see a pick up in volatility on Thurs. as the ECB news should be out before our market open.  Otherwise we wait for a decisive break out or break down for the end of the pause.

There has been some poor economic news out of both Japan and Europe lately.  While the official numbers for China are not too bad there is other data that suggests the economy may be weaker then reported.  Here is a look at some charts.

Commodity prices have been falling considerably.  Steel prices have dropped below 2012 levels.  In addition cement and iron ore (charts here) prices are testing their 2012 lows.  Rail traffic is obviously not very strong.   I have been seeing some articles on big giveaways developers are doing for real estate purchases.  It is hard to say from over here how dire the situation is.  We all know how the media can dramatize things.  However, there are clear signs of economic weakness there that will not be helped by Japanese and European weakness.  How all this affects the U.S. is a good question.  It seems unlikely to be good.  The sanctions on Russia will still take a while to fully affect the global economy.  The market has been in la la land.  It reminds me of the old saying it don't matter until it matters.  We may wake up one day and all the global stuff will matter.  Maybe it never matters and all will be well.  I guess we will see.


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