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Thursday, December 18, 2014

Daily update 12/18 Stampede

Back to back 2% up days.  You don't see that very often.  The last time was in March of 2009 as the bull market was kicking off.  Here is the daily chart.

What do you call that?  Its faster then a V bottom.  Not exactly  normal market behavior.  Breadth was 79% positive and the volume ratio was almost 90% on the upside again.  New highs were 190 and new lows were 22.  New lows have not been that low in a while. The new highs were good, but nothing to write home about.  Volume was high once again.  Lets have a look at the futures chart.

Three out of the last four bars were wide range on the upside.  Now if that is not odd, what is?  I don't know what else to call it but pure panic buying.  The futures popped a little more after the close and are just a stones throw away from all time highs now.  Relative to the 18 SMA they are now very stretched on the upside.  How much further will people be willing to chase it?

IWM got within a few cents of its trading range high.  I have seen several articles proclaiming it is getting ready to break out and run to new highs.  That remains to be seen.  Sometimes they do and sometimes they don't.  It also might break out and fail.  Too hard to predict.

Can we all agree the market is acting goofy?  Even some of the bulls on TV were having a hard time understanding what was happening today.  I have seen the market act goofy in the past.  It usually happens when it is on the cusp of doing something big and is trying to throw people off.  This fast move up is making the market internal divergences I have been talking about since July even more pronounced.  We had two days with the upside volume around 90% of total volume.  That is very rare and most often comes from a deep oversold condition like a 15% pullback or something.  There are two possibilities here.  This is either a kick off to a monster upside move or a final buying climax.  With all the things going on in the world and weak market internals it seems a bit hard for me to believe it is a kick off to a big up move.  How the market deals with this test of the highs should tell us what we need to know.

I would guess we won't be up another 2% tomorrow.  It is option expiration, but with all the volatility we just had it probably will be a quiet day.  Today turned the COMPX and SPX short term trends to neutral again.


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