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Thursday, July 14, 2016

Daily update 7/14 NAAIM sentiment survey

More talk about helicopter money and more buying.  Despite Japanese officials saying it isn't going to happen anytime soon.  They even said today they would have to change laws to do it.  Needless to say the market does not want to let the facts get in the way of a good story.

I am sticking with SPY for now.  The gains in this market are all coming overnight.  The end of day closes have been very close to the open.  This indicates the buyers and sellers are pretty evenly matched during the day.  Breadth was only +56% .  It started out at +70% so today had the most selling into strength we have seen on this break out.  New highs were up slightly from yesterday at 236.  Buying enthusiasm might be waning just a bit.

The futures were up much higher overnight then they got during the day.  They remain extremely extended from the 200 SMA.  Will that matter?

Sentiment has not really been of much help for quite some time so I have not covered it in the blog.  Here is a look at the latest NAAIM survey.

At 96 the NAAIM number made a big jump from 65 and is at the highest level since the 99 reading on 2/25/15.  That day SPX closed at 2113 and only managed to gain another 18 points over the next two months.  It looks like the big boys are already all in.  Sentiment is not bearish anymore.

We have not had any selling pressure on the break out yet.  We just keep gapping up every day.  I am guessing that some day we will have a down day even if it is years in the future.  Then we can see what investors really think.  Listening to them talk on TV has been interesting.  It seems most of the people that have been market skeptics for a long time are turning into raging bulls.  People like Kevin O'Leary and Larry Fink that have been bullish all throughout this bull market are a bit skeptical of this break out.  Blow off tops are by their very nature very strong.  They are one last panic buying attack.  Internally they look pretty much just like initiation thrusts of new legs up.  The difference is that blow off tops fall back to earth.  That most often happens because fundamentals do not justify the break out.  The poor fundamentals usually manifest in divergences in the major indexes.  We have plenty of those divergences as I have shown.  So a little patience is needed to let the market tip its hand on whether this break out is for real or not.


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