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Friday, July 10, 2015

Daily update 7/10 5 Reasons China Matters

The world woke up in a very happy mood today and the bulls are trying once again to get a bounce going.

The trouble is we did not achieve anything important.  The jury is still out on whether a short term bottom is in or not.  The breadth was a strong +76%.  However, new highs were only 51.  The lows came in at 58.  Volume declined noticeably.  SPY closed only a little bit above the open.  I am sure there was a lot of short covering.  Unfortunately we have not conquered resistance yet.

The futures broke out above the 18 SMA, but they are still in the rectangle.  If they get out of the box they still have the 100 and 200 SMAs above that could provide resistance.  The chart is improving technically, but sometimes that can bring the sellers out again.  The consolidation continues for now.

Everybody was so optimistic on getting a Greece deal they bid up stocks world wide overnight.  How many times have we heard we are close to a deal only to get nothing.  I don't know if this time is the time or not.  If it turns out not we could turn right back south again.  Until the market stops whipping around on every bit of news we are not going to go very far up or down.  Earnings reports will start to pick up some over the next few weeks which could certainly stir the pot even more.  This is a market for nimble traders only for now.

We have worked off the short term oversold condition while going sideways.  That often means more down to come.  The McClellan oscillator turned positive today, but I have no idea if selling is exhausted or not.  We did not get any intraday price action that indicated they were done.  Now that we have worked off the oversold condition they are likely to show up again if they are not finished.  I am tired of saying it all comes down to the news flow, but I really believe that.  We could go either way very easily here.

This is a pretty interesting article on China.  5 Reasons China Matters.  It is short, but a good read.

The short term trend shifted back to neutral on all indexes tonight.

Thanks to everybody that took the time to look at the new blog and answer the poll question.  I will keep working on it for now and see what happens.

The market and sector status pages have been updated.  Have a great weekend.


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