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Wednesday, February 14, 2018

Daily update 2/14 The Advent of a Cynical Bubble

Buying despite higher rates across the curve.

The CPI data at 8:30 AM sent the futures down almost 40 points.  However, the dip buyers stepped in to start them moving back up.  After the open the VIX plunged even though the market was still in the red.  Once it dropped below 20 buyers became more ambitious.  Breadth started out at -73%, but ended at +65%.  Quite the reversal.  New highs picked up a bit to 39.  New lows were stable at 80.  The 50 SMA is still another 20 points higher.  That seems like a minimum target now.

The premarket dip in the futures sent them back below the 20 SMA.  However, the dip buyers showed up and pushed them back above it.  They now confirmed yesterday's break of the 20.  They ended the day slightly above the 200 SMA.  That line provided resistance for a while today, but late in the day the futures pushed through it. 

The green count is starting to turn up sharply now. 

The short term bull pressure lines have now crossed back positive.  They are showing some significant buying pressure.  The long term lines remained positive through the sell off.  They could still get a negative cross down the road depending on whether the buying continues to be strong or not.

The market has worked off the short term oversold condition.  I think the VIX dropping below 20 is probably significant.  Some people look at that as a sign the worst is over.  QQQ and IWM were leading on the upside which is usually a bullish sign.  The rally might be getting some legs.  It looks like it is getting enough strength it won't roll over right away.  I looked at 5, 10 and 30 year rates at the close and they were all at new local highs.  The 10 year is over 2.9% now.  That did not stop the buying today.  Whether that causes a problem for stocks if/when they get higher remains to be seen.  For now it looks like we go higher to me.

This is an interesting read.  I very much agree with the type of bubble we have.  The Advent of a Cynical Bubble


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