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Thursday, October 9, 2014

Daily update 10/9

Splat.  I said last night that the V bottoms from 1925 did not show us that the selling was exhausted.  I wondered if the sellers might come back again.  That question got answered to say the least.  Here is the daily SPX chart.

SPX made a new low close for this pullback.  However, it did not quite get down to yesterday's intraday low.  The bulls still have a chance to save this but they are running out of room.  The good news is that we spent most of the afternoon essentially in a trading range.  This means selling could actually be exhausted at this time for these price levels.  That could just have been because we were down so much for the day by then.  They might be willing to sell again on another day.  Lets take a look at the futures chart.

That is some loopy price action.  Got buy em, got to buy em, no got to sell em, got to sell em.  We are at the lows of where we have been lately.  It is make or break time for the bulls.  The VIX is back above its weekly 200 SMA.  We have not had a weekly close above that line since 2011.  If we do not rally strongly tomorrow we could be in for a true VIX spike and a mini crash. 

There are so many things going on now that could be cause for selling.  The global economy has been slowing down for months.  The ECB is doing a lot of talking and not a lot of doing.  I guess Draghi said something about not doing FED style QE like so many people are expecting.  I really do not understand that expectation.  The ECB's charter prevents them from doing it.  Since they can't agree on much over there it seems like the odds of getting the charter changed are pretty low if not zero.  We know QE is coming to an end here and on top of all this we have Ebola fear going around.  Of course when the market looks like it is about to go over a cliff the buyers usually show up.  If they are going to do it this time tomorrow is the day.


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