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Thursday, March 24, 2016

Daily update 3/24 Durable goods

Seasonal strength met with overnight negative news.

The end result was a mixed day with most indexes up or down just a bit.  The breadth ended slightly positive after starting -81%.  Pretty big breadth reversal.  New highs came in at 54 while new lows popped up a bit to 22.  I am not sure today told us much.  There was clearly an absence of people interested in selling into the gap down this morning.  That allowed the market to stabilize all morning which emboldened some people to buy in the afternoon.  Since the market is closed tomorrow it is likely a lot of people were already out of the office.  That could have contributed to the lack of selling pressure on the open.  We will have to wait and see what happens on Monday.

The futures confirmed a break of the 20 SMA this morning.  They ended the day just fractionally below that MA.  This is the first confirmed break of the 20 since this rally began back in Feb.  Do we climb back above or turn down from here on Monday?

The green count slipped further today, but is still above the red.  This is the weakest the market has been on this rally.

The bulls did just enough to keep the bears at bay today.  Monday is shaping up to be the decision day.  Will the bulls show up to continue this afternoon's bounce?  Will oil keep going down and bring out the bears instead.  It looks like it could go either way to me.

Durable goods came in much worse then expected.  The question is why did weakness surprise economists.

Core durable goods were once again negative YOY.  While some might say the chart is improving, that is not really the case.  We are now into the major weakness that started at the beginning of 2015.  The fact is we are still negative even from that collapse.  I would call it muddling along rather then indicating an improvement.  .

Core Capex tells pretty much the same story.  We are in an unusually prolonged period of weakness without having a recession.  Odd.


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