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Monday, February 12, 2018

Daily update 2/12

Upside follow through.

There were bouts of selling today, but the bulls persevered.  Breadth was +70%.  New highs were still very low at 12.  New lows fell off to 74.  It looks like we are trying to make a short term low.

The futures hit the 20 SMA and backed off.  This chart looks constructive for further upside.  That is the first green price bar since the sell off began. 

The red count is coming down, but is still oversold.

The market is still very oversold short term.  There should be more impetus for a rebound.  The margin call selling should be over for now as well.  SPX closed above last Monday's low.  I really have no idea what to expect.  There is no example of such an explosion of volatility after such a long quiet period.  Normally volatility increases somewhat slowly.  I believe we will test Friday's low again someday, but how the price action unfolds is tough to guess.

I see and hear plenty of comforting words in the media.  The truth is nobody knows what will happen going forward.  We have never been in a position where the FED was shrinking the balance sheet.  They all say the fundamentals are good, but the fundamentals are subject to change with rising rates.  Nobody knows.  It is time to pay attention and see what happens. 


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