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Thursday, March 31, 2016

Daily update 3/31

This will be short as today did not give us much new info.

I scrunched the chart up and connected the last two tops that occurred before the mini crashes.  The blue trend line is still a ways up.  I guess that is the next upward target should this rally keep going.  The breadth was slightly positive despite most indexes being down.  New highs slipped a bit to 173, but were still strong.  Price remains very extended from the 50 DMA, but so fat nobody has cared.

The green count increased to 50 today despite the down day.  The red count is remaining slightly elevated.  I think we could turn down pretty easily, but so far the market has resisted the pull of gravity. 

I really don't have any idea how the next few days play out.  There will be fresh economic data, but will anybody care.  We still have several more days before earnings start coming in.  That could shake things up a bit.  In the mean time lets see if the bulls have any desire to push higher.  There was clear resistance this morning when they tried.  Tomorrow could always be different as the first of the month has an upside bias.

I found this snippet in Best March since 2009 puts S&P 500 back in black  pretty interesting.

But history says ruling out another downdraft this year could be a mistake. Stovall points out that since 1945 there have been nine other years in which the S&P 500 fell more than 5% in the first quarter and recovered all — or nearly all — its losses by the end of March.

And, while the index eked out an average full-year gain of 2.2% in each of those nine years, there were five years where the benchmark U.S. stock index actually made lower lows than the earlier March lows.

In other words it is not a good thing to do since the average gain is only 2.2% for the year.  Notice there is a 55% chance of a lower low this year.   Given the behavior of the VIX I believe the odds are even higher then that.


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