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Wednesday, September 2, 2015

Daily update 9/2 Factory orders

Bulls strike back.

Volume was very light indicating what I mentioned last night that people would not be real interested in selling into the strength.  Better to wait and see if we can gain some altitude first.  Breadth was +70%.  New highs moved up to 9 and lows were down a bit to 80.  Still nothing to write home about for bulls. 

The futures held up overnight.  They managed to climb back above the 20 SMA without ever confirming the red price bars.  They have not confirmed that move either, but could by morning.  If they are red in the morning then today was likely a lower high and we are headed back down to retest the low.  This chart still looks like it could go either way.

The green/red bar chart got a positive crossover today.  However, both numbers are extremely low.  I looked back a couple of years and could not find a time when both were under 20 as we have now.  We now have 73% of the stocks with white bars indicating a neutral trend.  Uncertainty abounds.

China is going to be closed for the next two days so we might not have as much negativity emanating from that part of the world.  Maybe that could help us bounce some more.  I really don't see anything that gives us particular odds for direction here.  The power is up for grabs.  Maybe tomorrow will help clear things up. 

Here is a look at the latest factory orders for consumer goods.

On a YOY basis orders have now been negative for 9 months in a row.  Somebody forgot to tell consumers they could spend the extra money saved from lower fuel costs.  In the 3 months preceding the FED's rate hike cycle in mid 2004 the growth was in the 7-8% area.  That is certainly a far cry from our current situation.  When this indicator went negative in the summer of 2012 they launched QE3 in Sept. of that year.  Once again I ask, why is the FED still talking hikes.  I will be surprised if they actually go through with it.


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