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Wednesday, February 3, 2010

Rally Attempt Day 3

1100 is the midpoint of the larger, 1070 to 1130 range, and it was resistance today. We tested it early and never came close after that. Today's pullback, however, was not very sharp, and came on lower volume, setting the stage for a possible follow through tomorrow. We weill be looking for a 0.7% increase or greater, along with an increase in volume. If we get one, it's not assured that we are in a new uptrend, but the odds are that we will be and any shorts should be covered. However, I would not be surprised to see lower volume tomorrow, as the npon farm payrolls report looms on Friday, and a lot of big money will be waiting for that. The technical indicators, while stioll weak, are turning up, so barring an apocalyptic unemployment rate, we might get the follow through on Friday.

The Nasdaq had a good day today, but is still weak. Both this and the SPX have a confluence of moving averages looming just above, which usually puts up very stiff resistance. Oddly enough, CMF appears to be increasing ever swo slightly.

The picture on the Dow industrials depends a lot on where you draw the lines bordering the current range. The recent low is the obvious bottom, but the top is a little problematic. If it's where I put it, then then we are above the midpoint, and stuck in between that and the moving averages. Put it a little higher and we are below the midpoint and things aren't quite so bullish. Fortunately, whatever happens on Friday will probably make all this moot.

The Rusell 200 is pretty straightforward, 600 at the bottom, 625 at the top, and 612.50 in the middle. The problem here is that the moving averages are now in the middle of the range, and for the second day in a row threw us back. This is the closest to the bottom of it's range, and if it breaks will lead the rest of the market down.

Gold refuses to collapse and is now forming a classic double bottom base. 105 seems to be a solid floor, and it is consolidating along the 50dma. I don't like using volume on ETFs as a proxy, but it is interesting that CMF has been climbing since the first leg down in the current base.

If you've been reading the blogs today, you have seen the references to the Bloomberg article in which the birth/death model used by the BLS will be undergoing revisions. Past NFP reports will be revised downward by a total of 824, 000 (I like Mish's take on it, here). It turns out that the birth/death model has severely overstated job creation in the last two years. And that is a surprise?

I don't know if I will have internet access later, so the new highs update will be up a little early tonight.

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