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Monday, December 21, 2015

Daily update 12/21 Hussman article on the FED

The bulls come to the rescue (at least for one day).

SPX closed slightly above the green support line.  Unlike last Monday we did not test the low before rallying.  The breadth was +63% unlike last Monday when it was rather negative despite the bounce in SPX.  New highs were 28 while new lows were 176. 

The futures bounced from support.  They are still below all key MAs though.  The bulls did not do enough today to tell us if they want control back or not.

The red count dropped back under 50, but it is still higher then the green count.  This is to be expected since SPX is right about where it was 7 days ago.  We still do not have a short term trend in place.

Does the positive seasonality take over for the rest of the month or are the sellers still out there just waiting for higher prices.  We had some positive divergences at Friday's low that hint at a possible short term bottom forming here.  However, there really is nothing that is screaming bottom.  The daily chart is making lower highs and lower lows.  SPX is going down, it is just doing it extremely slowly.  Maybe this is an ABC type pullback and we are making a bottom.  I can't really say.  A piece of bad news could easily send the market spiraling down from here.  All I can say is the bulls have more work to do to turn the market back up. 

The market went over a month without back to back up days.  It finally put three days together only to have the entire up move wiped out in two days.  We could easily continue to chop around in the short term.  However, longer term the market continues to weaken.  On Friday night I took a look at the number of SPX stocks down over 20% from their 52 week highs and found the count has now risen to 40%.  That is actually worse then after the Aug. mini crash.  Its getting pretty hard to argue that we are not already in a bear market.  The market technical condition continues to deteriorate.  There can be no argument on that.  It is becoming less and less likely the market is going to break out on the upside.

This is an interesting take on FED actions.  Reversing the Speculative Effect of QE Overnight  Somewhere I read another article that claims the current action is more tightening then people think.  I don't know enough about how all that stuff works to truly understand it, but I can understand that tightening is tightening.  There is no dovish rate hike.


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