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Wednesday, September 21, 2016

Daily update 9/21 U.S Economy Remains Vulnerable

Ah, Janet saves the day by doing nothing and sounding confused in her press conference.

SPX closed above the 20 SMA and slightly below the 50.  The oversold condition has been completely worked off now.  Breadth was a strong +83%.  New highs picked up a bit to 71, but that is obviously still way low this close to the highs.  New lows were 20.  SPX is coming into a couple of months of potential overhead resistance.

This is a 60 minute chart of the futures with just intraday data to show the gap.  That big gap down day happened to be the day SPY went ex dividend which messed up the gap on that chart.  The futures came within .5 points of the high of that gap down day marked by the red line.  That could be resistance.  The 200 SMA is just a little above which could also be resistance.

The futures made it up above the 50  SMA and ended the day just below the 100.  Another sign the oversold condition has been worked off.

The green line crossed above the red and is just slightly below 50.  Yet another sign the oversold condition has been completely eliminated.

While SPX closed above the key 2147 level there is a lot of overhead resistance up here.  The 20 DMA has crossed below the 50 which is a sell signal to some people.  What happens in the next couple of days will tell us a lot.  Will the bulls keep the upward pressure up?  Will the bears strike back?  Over the years there has been a tendency for the market to reverse FED day moves although that has not been the case as often the last year or so.  Since we are at potential resistance that is a possibility.  I don't think the recent sell off was in fear of a rate hike since expectations never approached anything close to that being a reality.  Therefore, it is hard to say if the sky has cleared.

Today turned the short term trends to neutral in SPX and R2000 and up for COMPX.

I don't really know what to say about the BOJ action.  The currency market had a lot to say as the Yen was up big against the Euro and the Dollar.  Since the BOJ has been hell bent on devaluing the Yen that probably did not set well with them.  It is clear the BOJ is getting more and more desperate.  They have been printing money for 15 years to no avail.  Well I guess maybe pinning the 10 year rate to 0 will be the magical cure.  I don't think I will be holding my breath. 

A good look at a bunch of economic charts.  U.S Economy Remains Vulnerable

These are just a few indicators in a battery of twenty-one that we examine, and whilst there are no alarm bells yet, the aggregate composite of all 21 indicators shows the US economy the most vulnerable to exogenous shock since this expansion started:

This is what I have been saying.  The economy is really, really weak.  Whether it tips into recession or not remains to be seen.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.