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Thursday, October 8, 2015

Daily update 10/8

The market had trouble with resistance this morning, but the FED meeting minutes took care of that problem.

SPX is almost back to the scene of the crime.  That was the big rally after the FED announced no rate hike that failed miserably.  I should have noted that last night as the next resistance point.  SPX closed about seven points below it.  Breadth was strong once again at +74%.  New highs increased a bit to 60 while new lows came in at 12.  There has been very little selling pressure on this rally during market hours.  We have not tested a prior days low yet.  Is the selling over or just waiting for higher prices?

The futures made it up to the 200 SMA on the FED minutes rally.  ADX is actually starting to rise a bit.  That has not been the case much of this year on rallies.  The 200 MA is usually important resistance or support on this chart.  The market may pause here even if it intends to go higher eventually. 

When I did the rest of my analysis last night after I finished the update I noticed we got a Zweig Breadth Thrust.  This is not a short term timing indicator, but rather a longer term bullish signal.  Generally speaking prices are usually higher 12-18 months later.  I was certainly not expecting that at this point in time.  I don't have any idea how often it fails to work either.  This is a complication for the bear case, but I can't say it invalidates it.  I have a signal I have developed that if it triggers would suggest odds are high the bottom is in.  I will be monitoring it. This rally was built on the idea that the economic data is so bad the FED will  not raise rates.  That isn't exactly good fundamentals.  At the same time it looks like we have a global recession going on that appears to be getting worse.  That also is not good fundamentally.  Make not mistake this was some serious buying going on.  However, mMajor indexes have all broken down into primary downtrends.  I am going to need to see more proof before I would be comfortable saying the worst is probably over.

With all this buying over the last few days I have to wonder if the Aug. low would hold if we end up testing it again.  Will all these buyers hang on if they get underwater?  What impact on investors opinions will the coming earnings season have?  Things could easily change over the next few days.  Stay tuned.

Today SPX turned its sub intermediate trend to neutral.  The other indexes have not done so yet.  With the short term trend up we will have to see how far the bulls want to push it.


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