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Thursday, October 15, 2015

Daily update 10/15

Yee haw.  Nothing like some terrible economic data to bring out the buyers.

SPX closed above the 9/17 resistance high.  Is that it?  Is resistance conquered?  Beats me.  We essentially gained about 3.3 points since 9/17.  With the index at 2000 that is a paltry amount.  Breadth ended at +78%.  That is rather high for this late in the rally.  That is high enough for a buying climax.  New highs recovered from yesterday's poor showing to 52.  So far the rally peak was 62 on 10/9.  Today's buying spree did not result in an expansion of new highs.

The futures parked themselves at the upper Keltner channel.  Will they break out again or turn back?  I don't know, but I can see this is possibly just a retest of the 10/13 high.  We ended with a green price bar and back above the 18 SMA.  We have not confirmed that green bar with a higher close so I cannot say we have a micro uptrend.  Since we had a confirmed micro downtrend it will be easy for this chart to roll over again.

The green/red bar chart shows a drop to 50 on the greens yesterday and no increase today.  At first I thought it did not update correctly, but it appears to be right.  The red count dropped a bit.  I don't have enough experience interpreting this in real time to know whether this divergence is a problem or not.  There are few instances of the count getting this high in the first place.  There are times where the count drops while SPX continues to climb.  That is not the case here because of the two down days.  In that case more often then not SPX struggles to move higher. 

This is an interesting case.  Charts are littered with price reversals that make a retest of the recent high or low.  If that is the case we should turn back down tomorrow or Monday.  If this is a renewed thrust we should continue higher tomorrow through resistance.  All I can say is that we did not do enough today to give the bulls the green light.  If we fail here then all today did was add fuel for the bears. 

This entire rally has been caused by people buying bad economic data.  The only thought seems to be the FED will not raise rates so buy, buy, buy.  At the same time the economic data says we need to be on recession watch as that is a distinct possibility.  In what I think are key data series we appear to be weaker then in 2012.  We narrowly escaped going into recession that year thanks to hurricane Sandy.  I doubt we can count on another hurricane in a heavily populated area to save us again.  While I am starting to see some people talking about the R word most investors act as if that is not likely.  That lack of worry will come back to haunt the market in a big way if it turns out the economy fails.  I will be monitoring the important data closely.


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