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Tuesday, September 15, 2015

Daily update 9/15 Industrial production/Empire survey

Nothing like poor economic data to bring out the buyers.

Volume was very light so there was an absence of sellers today.  Breadth came in at +67%.  Decent but not great.  New highs flew up to 20 (sorry for the sarcasm).  New lows dropped a bit to 88.  That is another sign the sellers took the day off.  SPX ended the day in the resistance zone and near the upper trend line.  Do we break out or turn back down?

The last time the futures got up in this area they sold off sharply.  Is resistance still here?

The McClellan oscillator turned back positive today, but the 10 DMA lines are still negative.  The green/red bar chart is interesting tonight.

We have the highest reading of green bars since back in March.  Is that good or bad?  Since March high readings have brought out the sellers.  I don't know if things will be different this time or not.

I realized today the FED meeting is on Thursday this week instead of Wed.  Buyers were not shy today, but now we are in resistance.  The TRIN was unusually low again at .51.  With the high reading on the green/red bar chart this could all add up to some selling tomorrow. My guess is we will stay in the triangle until after the FED announcement.  The light volume suggests that most people are sitting on the sidelines.

The latest IP data came out and it was in the negative column again.

The economy could not build on last months increase in IP.  It fell back below the 12 month SMA.  The 3 and 6 month MAs are also below the 12.  It has fallen 6 out of the last 8 months.  It is certainly not painting the picture of strength normally associated with a rate hike.

This was likely the biggest miss on record.  The data came in at -14.67 against expectations of -.75,  That is by far the worst reading in this recovery.  It looks like the build in inventories I have been talking about for a few months is likely starting to hit production.  This is really not good.

These two pieces of data paint a picture of economic weakness. I have to wonder if the rally today was not caused by a number of people believing this data killed any chances of a rate hike this week.  It is clear there is no economic justification for raising rates.  We will have to wait and see if they do it anyway or not.


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