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Thursday, January 24, 2019

Daily update 1/24

More consolidation.

Not much to say as it was an inside day.  Buyers and sellers both took turns.   Breadth was +64% as strength in the SOX and transports sparked some buying.  New highs picked up a bit to 35.  New lows came in at 21. 

The futures tried again to get above the 200 SMA, but failed.  The last three bars closed below the 20 SMA, but no confirmation of a break yet.

The green count continues to fall, but remains well above the red line.

After a sizable gap down and sell off the other day the market has been spinning its wheels.  There is clear resistance every time the futures get above the 200 SMA.  The dip buyers have come in on the sell offs.  The breadth was strong for such a mild up day in SPX.  The big caps held the market back today.  The broad market always ends up going where the big cap stocks go.  For the market to go higher the big caps need to pick up some bids and resume upward movement. 

In the early stages of this rally I heard a lot of people talking about a retest of the low.  That talk seems to have died down considerably.  I saw Bob Pisani saying that Lowry's research says the strength of the rally means a retest is unlikely.  They are usually pretty good from what I hear, but they may be wrong this time.  I don't believe we will just keep going up to new highs from here.  Some kind of retest is highly likely.  That does not mean we must make a new low in the process.  A retest can create a higher low.  It feels like this rally has picked up a lot of believers.  My past experience in bear markets indicates that with the position of the indexes below their 200 DMAs that can be a bad thing.  We will just have to wait and see how this plays out.


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