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Thursday, September 22, 2016

Daily update 9/22 This is Why the Job Market Stinks, but No One is Talking about it

Buying panic.

SPX closes above the 50 SMA and closes the 9/9 gap down.  Breadth was +80%.  New highs spiked up to 157.  The volume the last two days is a bit light relative to the size of the move.   Compare it to the volume coming off the brexit low back in June. 

The intraday futures chart shows they closed the 9/9 gap just after 10:30 and that was the high of the day.  The action was sideways the rest of the day.  A lot of people got caught with their pants down on the big gap so it makes sense there will be resistance there.  How strong that is remains to be seen.

The MCO hit the overbought level for the first time since early July.  In fact it has rarely been positive since the middle of that month. 

The green count shot up to almost overbought today.  Like the MCO this is the first time it has been this high since mid July.  The weakness in these two indicators over the summer will be very important if the market starts to really sell off.  This could be a sign of some significant distribution after the break out to new highs.  That really seems odd on a break out after more than a year without a new high in SPX.  Instead of the big boys piling in it really looks like they were selling it.  There may be more downside risk then most people are currently thinking.  Just keep that in mind should things get a little rocky going forward.

In the days leading up to the FED decision I heard several money managers on CNBC say they thought the FED would raise rates.  I really do not understand why they thought that, but it is possible they had hedges or some shorts in place just in case.  Very few traders and money managers I saw today said they were buying.  It is possible this move is largely short covering.  I think it is safe to say there are a lot less shorts and hedges in place now then two days ago.  That is only important if the market rolls over again.  From here we have the high at 2193 and the 50 DMA at 2169 to watch.  Closing back below the 50 might not be good given that the 20 DMA is already below it.  The VIX is already down below 12 so it is not clear there will be a desire on the part of the bulls to keep buying a short term overbought market.  There also could be significant resistance between here and the high given the nature of the trading range in July and Aug.  If SPX makes a new high it might be tough to stay there.

Today turned the short term trend up in SPX and R2000.  That has sometimes been the kiss of death for the bounce over the last couple of years. 

Regardless of what happens in the next few days I suggest keeping an eye on the election.  There is a strong consensus on Wall Street that Hillary is going to win.  The first debate is on Monday and who knows what will happen.  Should Trump do well it could cause a pullback.  Most presidential election years see a pullback in Oct. anyway.  If the polls are close that seems likely this time. 

This is a pretty interesting article.  This is Why the Job Market Stinks, but No One is Talking about it

In light of all the racial trouble going on these days I found this piece of data pretty interesting.


The media fuels the flames in this matter every chance they get.  They often print lies about what happened.  I do not understand why.  One possible consequence of this situation is likely to be fewer qualified people wanting to be cops.  I think that is already a problem in some cities already.  It seems likely to get worse from here. 


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