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Monday, August 10, 2015

Daily update 8/10

Bulls fight back.

The bulls showed up right on que.  We had the 200 SMA and lower Keltner channel for a springboard.  The breadth was a strong +73%.  New highs came in at 84 with new lows at 82.  It looks like we have a little triangle forming over the last few weeks.  Since it is symmetrical it does not give any hints on which way it might break.  Volume was light.

The futures blew through potential moving average resistance.  They are almost back up to major resistance though.  Will it hold again? 

Today had an interesting change to some internals.  Check out these two charts.

So both breadth indicators had positive crossovers as did the bull/bear price chart.  In fact bulls eclipsed the 50% mark this time. 

What does all this mean?  We are back to neutral in the short term trends.  We have some positive internals.  That all seems potentially bullish.  Now the problem may be the VIX.  It closed at 12.23.  The VIX dropping under 12 has been a good sell signal the last couple of months.  Obviously if we continue higher it will get under 12 again.  Will they sell it yet again? 

This market is acting just like 2000 except the volatility is lower.  It was changing direction constantly.  However, the moves up and down were considerably bigger in size then they are now.  I have no idea what is going to happen next.  The positive internals might be signaling a chance SPX makes a new high.  However, the sellers may come out again when VIX gets under 12.  The number of SPX stocks down 20% or more from their 52 week highs has increased to 25% of the index now.  I am positive a new high in SPX will get sold.  It is just a question of do they sell before we get there or not. 


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