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Thursday, June 29, 2017

Daily update 6/29 Yes, Ms. Yellen…There Will Be Another Financial Crisis

That was interesting.  That is the third day in a row of a big range.  Given the price levels it was not really all that big, but compared to what we have been having it is huge.

SPX briefly penetrated the 50 SMA, but then bounced considerably off the low.  SPX made a new low for the month which caused a lot of stops to be executed.  As soon as the stops were taken out it rallied strongly.  There must be a lot of pissed off traders out there.  Breadth was -68%.  New highs dropped way down to 70.  New lows picked up a bit to 27.

The futures went well past the lower channel line, but came right back up into it.  The -DI line got well above 35 which opens the door to a bigger decline.  However, the market usually bounces next.  I don't think we are headed for the big decline just yet, but keep an eye out in case I am wrong.

Even though SPX closed right about where it did on Tuesday the red count is considerably lower.  It is not real big, but it is a positive divergence.  Given how bullish the market has been this year that is probably enough to signal a likely low.

The big volume in QQQ continued today.  Much bigger then yesterday.  It thought about breaking that H&S neckline, but decided against it for now.  It will be real interesting to see what happens to this should the market rally.  With CNBC having FANG week the sentiment seems right for a top.  It could bounce from here and still end up failing.  I think what happens to this will be key for the broad market.

Intraday the VIX crossed 15, but closed at 11.44.  That should be high enough to get a new high in SPX should the market rally from here.  How far it might go past the old high would probably depend on how fast the VIX gets below 10.  For the bounce scenario to play out I believe the market needs to go up tomorrow.  Further downside in this condition could lead to a considerable pickup in selling pressure.

I guess I am not the only one thinking Yellen might be wrong on the financial crisis thing.  This is a pretty good read. Yes, Ms. Yellen…There Will Be Another Financial Crisis


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