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Monday, September 22, 2014

Daily update 9/22

Did the world change over the weekend?  The reason I ask is because there were 32 new highs and 154 new lows today.  That is one trading day after new all time highs.  That is a major drop in buying interest from an already low 127 new highs on Friday.  That was the most new lows we have had all year.  Seems odd to me one day off a new high.  Here is the daily SPX chart.

SPX closed back below the 18 SMA again.  This chart looks a lot like a short term top there don't you think.  This month we have had four separate days where SPX probed new highs but the day ended with breadth negative.  That is clearly distribution.  Lets see what the futures chart looks like.

The futures are back to red price bars again already.  That was a rather brief trip to new high ground.  They closed below the important 50 SMA.  While they are still above the green support line they look headed that way.  Breadth was 81% neg. so the selling was broad based.  That could easily be a kickoff to a decline.

I commented last week how the rally to new highs looked index driven to me.  The market was close to breaking down key support when it started.  It turns out there were six banks involved in the handling of the Alibaba IPO (btw it was the biggest IPO in history).  I am certain they wanted the market going up as they were doing the final pricing and share allotments.  Now the IPO is out and they don't care what happens so the selling started up again.  I think we are now returning to the previously scheduled pullback.  I have been saying all month I need to see a strong day and buying at the highs before saying the market was likely to go significantly higher.  What I keep getting is selling into strength at the highs.  So far the dip buyers keep showing up to prop the market up.  However, if they don't get some satisfaction pretty soon that buying will likely dry up.  Today really seemed like a 180 from all the bullish excitement on Friday.  Was it a one day wonder or a shift in market attitude?  We still have the weakest technical condition at the highs we have seen this entire bull market.  It is pretty easy to see how we could get a bigger pullback than we have had since 2012.  We have all the conditions now that have been present at the start of many bear markets.  Do not be lulled to sleep.

This an interesting look at household income.  Median Household Incomes by Age Bracket: 1967-2013


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