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Wednesday, October 7, 2015

Daily update 10/7

Buyers still at it.

SPX ended a fraction below the 50 SMA.  That was second and last target.  I guess the yellow downtrend line then the 200 SMA are next if we get through here.  Breadth was strong again at +74%.  The red line, the upper Keltner channel and the 50 SMA have converged in this area.  That is quite a bit of potential resistance.  We sold off a good bit in the middle of the day, but dip buyers stepped in a bid prices back up.  There was resistance evident today.  What is not evident yet is how stiff it is.

The futures stayed above the upper Keltner channel line so they were able to push higher.  Closing back inside the channel will be the first indication we are losing momentum.

Lets take a peek at some internals.

A reading of 88 on the green/red bar chart is the highest since Feb. 2014.  That is some significant buying there.

The McClellan oscillator is the highest it has been since Oct. 2014.  These indicators are showing broad based buying.  This is normally the kind of strength seen between the lows of a successful retest.  This pattern does not really resemble anything I have ever seen before.

People do not appear to be afraid of earnings season.  It will be interesting to see if that was a good thing or not.  I have seen moves both up and down into earnings that are quickly and completely reversed.  Sometimes investors are really fooled. 

There seems to be quite a few people convinced the low is in and it is onward and upward.  However, getting this overbought under the 200 DMA can be a place the market starts a new leg down from.  We will have to see if this resistance area is meaningful or just temporary.  I am sure earnings will decide whether the market goes significantly higher or not.  It may take a few days of reports before investors decide whether to buy or sell.

The short term trend can be difficult to ascertain in choppy volatile markets like this one.  I believe we did enough to classify all indexes as uptrends.  Just keep in mind there have been many times this year that meant it was time to change direction.  I really have no idea if we keep going up or not.


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