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Monday, December 8, 2008

The "Spending Us To Oblivion" Rally

Today was credited to the prospect of even more government spending, on infrastructure and more bailouts. Could be, but I suspect it was more testesting of technical levels. We had a bit of selling toward the close, but nothing like the massive sell offs we saw during November. I expect another run at the 50dma, at it looks like the SPX will be the first to do it.

I pointed out a few days ago that RSI 50 was giving the indexes trouble, and it finally fell today, another indication that this rally has some legs.

Despite the big up day, the VIX barely moved. I'm not sure what that means, but anomalies likes this make me feel uncomfortable.

The Nasdaq broke it's trend line today, and got a nice gap up. Volume could have been a little better. RSI 50 fell here as well.

The Russell 2000 has one more hurdle to clear at 486 before it takes on the 50dma.

This looks amazingly like the SPX chart. Basic Materials contains the commodities industries (other than oil and gas) and was the most heavily beaten up sector in September. This is almost entirely dependent on the dollar index, dollar up, commodities (and lately, market) down. Gold and silver miners are also in this sector, which has been one of the strongest industries since we hit bottom in November.

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