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Monday, November 10, 2014

Daily update 11/0

Another slow creep up day.  The last four days have seen slight price appreciation with breadth in low to mid 50% range.  I have seen similar moves from time to time.  It usually ends with a down move that retraces the entire slow creep up in 1 or 2 days.  This creep started from 2001.  Don't be surprised to see that level tested in the days ahead.  The pattern generally last 3 to 5 days so we could continue up again tomorrow.  Here is the daily SPX chart.

I adjusted the trend line I added Friday.  I first drew it from the two July peaks.  I moved to include the intraday peaks from Sept.  This encapsulates the extremes a little better.  It gives the market a little more room on the upside before hitting it.  Time will tell if this line is important or not.  Lets see what the futures chart looks like.

The +DI line has slipped below the ADX line and the MACD has crossed below its signal line.  The futures have clearly lost some momentum, but continue slowly moving up.  This chart looks ripe for a bit of a pullback at any time now.  Of course that does not mean it will happen.  That would require somebody to actually hit the sell button.

While the slow creep up pattern looks bullish it usually means the market is tired.   I can understand it being tired.  Look at the V pattern.  As I said before I can find no historical match for this situation.  We had a lot of technical damage done on the sell off that always has led to a retest of the low or some kind of consolidation before ripping out to new highs.  We don't have either.  I don't have a clue how this plays out.  I have seen those slow creep patterns reverse sharply, but not always.  Sometimes they just dip a bit and resume going up. 

There is no shortage of stocks well off their highs.  We are now coming into the tax loss selling season pretty soon.  Something to watch out for.  It may come into play this year.

Here is an interesting couple of charts.  These are Goldman Sachs indexes.

There was a clear global movement of money from economically sensitive stocks to defensive stocks.  It would appear that some investors are getting worried about the global economy.  Are they justified to be worried?


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