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Thursday, August 11, 2016

Daily update 8/10 U.S. Federal tax receipts.

New closing high for SPX.

Talk about light volume.  Breadth was +58% which is the weakest on a thrust type day in a long time.  New highs came in at 208.  The bulls were a little more ambitious this morning.  Curious action mid day though.  SPX sat just below the 8/9 high for several hours mid day.  Twice late in the day price spiked up over that high, but turned back immediately.  The upside seems to be tough to come by.

The futures closed 4.25 points above resistance.  That is not really enough to say much of anything.  It is possible we just stop at yet another resistance point. 

Despite the thrust type day the green count remains below 50.  It is creeping up on it though.  Another up day should do it. 

Notice the MCO in the bottom panel has been negative for 11 days in a row while SPX moved higher.  The last time I something like that was Feb. of 2012.  The market kept going up until early April that year with the MCO negative most of the time.  In May and June the market sold off back below where the MCO went negative in the first place.  That was very unusual though.  Most of the time the MCO is only negative a few days before a pullback happens.  This 11 day streak is the second longest that I know of.  Before 2012 I would have said a pullback was imminent from this condition.  Will we keep on going up like then or pullback soon like a more normal market?

What a tough slog.  SPX closed at 2173 three weeks ago.  It has made a whopping 12 points since then.  I would call that a slow creep up.  This pattern can reverse sharply, but not always.  While we keep crawling higher it feels like there are sellers hitting the bids here.  I don't know if that is trouble or just temporary.  I have seen it both ways.  We are in the time of year of tops and sell offs unlike Feb. 2012.  The market might not keep going up for months on end from here.

This chart is a little hard to explain if the economy and especially the job market is doing as well as the government and Wall Street proclaim.  The U.S. has always been in recession when tax collections got this weak.


On the other hand, it explains why restaurants and retailers are reporting drops in traffic.  The conversation on CNBC today was all about the drop in mall traffic and they noted this being Aug. the talk is normally about great back to school traffic.  This chart and the GPDI chart I showed the other day suggest a recession is imminent if not already started.  I don't have any regular economic data that suggests we are in a recession yet, but future downward revisions could always change that.  At any rate my recession warning I issued last spring is still in effect.  If anything the odds of a recession in the near future have risen since then.


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