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Thursday, June 18, 2015

Daily update 6/18 Paul Tudor Jones

Quite the buying explosion.  The Russell2000 and COMPX both made new closing highs.  The COMPX actually got above its 2000 bubble high intraday, but closed right on the number.  The totally random market sure does have some interesting coincidences.

So another test of the high it is.  Volume picked up a good bit today.  I don't know how much was short covering and how much was new money.  The breadth ended the day at +64% despite being +73% at the intraday high.  There was considerable selling into the strength.  New highs increased a bit to 122.  Still not enough to show excitement by buyers.  The new lows remain quite elevated for this close to the highs at 51.  The stats do not really indicate this is a launch.  The bulls need follow through and a blast out to new highs in the lagging indexes. 

The futures are once again up into resistance.  They are pretty extended from the 18 SMA now.  Will they find buyers or sellers up here?  Over the last few months they have been reversing whenever they get extended like that.  I don't see anything at the moment that makes me think it will be different this time.  It is all up to the bulls to keep up the buying pressure.

I talked about the bearish sentiment in the AAII survey yesterday.  Here is a look at the NAAIM survey.

The active money managers have the lowest long allocation since coming off the Oct. low last year.  If they decide to pile into the market there is upside fuel now.  They could always decide to sell into the strength and reduce exposure even more though.

From what I heard today there were three separate things driving the move.  There was positive news in the biotech sector which pushed IBB up over 3%.  I suspect this was behind the new highs in IWM and COMPX.  They both have quite a few biotechs in them.   There also seemed to be an idea that the FED comments yesterday mean one rate hike and done.  On top of all that there was a rumor floating around something about money for Greece til the end of the year.  The question is what happens now.  While the futures are a bit extended in the short term there is no long term overbought condition.  Sentiment is not overly bullish.  It may even be a bit on the bearish side.  Have the sellers finished their business?  Will bulls show up and outnumber them even if they haven't? 

There is a very interesting video in this article.  Well worth the few minutes to watch.  TED Talk: Paul Tudor Jones Discusses Profit Mania


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