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Wednesday, March 23, 2016

Daily update 3/23 NIRP

A slight bit of profit taking today.

SPX closed below the 3/16 low I mentioned last night.  Dropping below that low today did not bring out the sellers though.  The Thursday before Good Friday has a strong upside bias so the bulls may show up tomorrow instead.  Breadth was -68%.  Small caps and oil stocks were hit especially hard.  Oil was hit when the IEA happened to note that a production freeze (the rumor that started the oil rally to begin with) would really be meaningless.  Well duh.  People say markets are smart.  The truth is the market gets lucky sometimes and gets things right.  People seem to forget all the times it gets things wrong.  Oil will eventually be back to the lows.  New highs came in at 62 while new lows picked up slightly to 13. 

The futures ended the day just above the 20 SMA.  It is break or bounce time.

The green count dropped below 50 again.  This is now neutral.  Break or bounce time on this one also.

Another down day tomorrow will put the market into pullback mode. Given the upside bias for tomorrow the bulls will probably show up in the absence of bad overnight news.  If the bulls show up, but don't get through the rally highs early next week the sellers are likely to show a little more force.  If the bears show up instead the logical target would be the 20 DMA.  However, the 200 DMA is between here and there.  Maybe the dip buyers show up there, maybe they don't.  This entire thing could depend on what oil does.  I think the strong buying we saw on this rally was inspired by the big rise in oil.  That oil rally had no fundamental justification.  I don't know that it will undo itself quickly or not, but it could.  Something we will have to watch.
This is an interesting article on NIRP.  I do not believe the FED will ever introduce negative rates here in the U.S., but we will see.  The NIRP Hail Mary


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