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Tuesday, October 4, 2016

Daily update 10/4

Really odd day.

There was some unusual volatility early in the day.  About 11:40 the ECB said they were probably going to end their QE program by a taper.  That sent the Euro up and gold, bonds, and stocks lower.  Whether any of these moves last past today is anybody's guess.  The breadth was -70%.  New highs came in at 63.  SPX closed below the 20 SMA which is already below the 50.  The bulls are on the ropes a bit here.

The futures ended the day just below the lower trendline.  They do not have a confirmed break yet.

Despite the down day the green count actually increased a bit.  It remains below 50 though.

Downside follow through tomorrow would confirm today's break of the lower trendline.  It might also turn the short term trend down.  I am not sure what to make of the noises coming out of the ECB.  The 9/9 big down day came after the ECB meeting that did not extend QE past March 2017.  That sent the bond market into a tizzy.  Now they are talking about tapering.  This seems to be taking people by surprise.  I think most investors have been expecting them to just keep extending QE.  Is this just bull&*() or is the ECB trying to prepare the market for ending QE?  I am positive most people holding those trillions in negative yielding bonds will not want to be in those positions when QE ends.  Any sign there is an end to QE could send them rushing to the exits.  I don't know if this is something people will see as a sign or not.  Should the bond market start selling off the ECB could come out and say they were just kidding like Bernanke did in 2013.  How does anybody predict this stuff.  Today might have been the start of a move down or just another quick dip and tomorrow the bulls push us back into the triangle.  Should the bears come out to play tomorrow the key number below looks like 2120 on SPX. 


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