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Tuesday, February 10, 2015

Daily update 2/10 Warning from U.S. treasury on leveraged loans

The bulls showed up again just when they needed to.  Here is a look at SPX.

SPX made a new high close for the year.  However, it was below the 2/6 intraday high.  Not exactly clearly above resistance yet.  Oddly the breadth was only 54% positive despite SPX closing over 1% higher.  With all the major indexes up quite a bit that is really, really odd.  Did people go out and buy only the biggest cap stocks in each of the indexes?  We have had several odd mismatches this year with breadth and the size of the move.  New highs increased a bit to 88.  Once again under 90 even on a big up day.  Not much of a sign of strength.  New lows increased from 21 to 34.  Once again the lows are higher then they should be sitting here just below the high.  It is possible today was just a retrace of the Greek news that sparked the sell off the afternoon of 2/6.  It was not a strong enough day to indicate we are blasting off.  Maybe we will get strong follow through tomorrow to clear things up.  Lets see what the futures have to say.

The futures are trying to break out of the upper Keltner channel once again.  Will they be successful this time?  Will resistance win out again?  The 18 SMA has caught up to price now eliminating the short term overbought condition.  Breaking that MA could put the bears back in control. 

The bulls have come out to buy the dip all year.  However, they have not gone beyond the call of duty and pushed prices to new high ground.  With a possible lower high triple top forming another turn down could bring out a lot more selling pressure.  Will the bulls come out to play again tomorrow?  They will probably need more desire then they showed today to power through resistance.

I have written about the large amount of high risk loans in the system.  Many of those loans went to energy companies.  Here is a good article on the subject.  Treasury Warns Congress (and Investors): This Financial Creature Could Sink the System  Here are a couple of interesting charts.

The so called reach for yield has caused much money to be loaned out with very low lending standards.   That has been the cause of past financial crises.  Will we get lucky and this time is different?


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