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Monday, December 19, 2011

Sad News For The World's Comedians

 I expected a bad day today after the sad news last night of the demise of the most certifiably looney national leader in the world, Kim Jong Il. Sure, we still have Hugo Chavez, and that clown in Iran, but they couldn't hold a candle to Mr. Kim. Now we are in danger of having a sane and rational government in North Korea. The market responded at first with a small up move at the open, but that was erased in short order, and it was downhill from there. Volume is coming down to holiday levels, as anyone who is still sane on Wall Street is taking the week off, but that did not stop the carnage. CMF is now down near the level it was at the bottom of the summer mini crash, which means it has a really good chance of reversing soon.  Other than that  the chart has nothing going for it, and is decisively below 1215, the 50% retracement of the last move up. Especially considering this is normally a time of seasonal strength (even in 2008 in the midst of the worst market panic since 1929 we had a Santa Claus rally), you have to conclude that the market is in a lot of trouble.

The Nasdaq has, at least temporarily, stopped under performing, but that is probably a temporary situation. TYhe trend in price relative is down, and this is quite a bit weaker, in terms of position within the trading range, than the SPX. Volume is also a little higher on a relative basis. Remember that stupendous October we had? We just gave back half of it.

The price relative on the DOw industrials keep mioving up, and that is not good news. The best you can say here is that this will drop less than the rest of the market. If you have a billion dollar mutual fund and have to stay invested, you put it here. If you have a few bucks like me, you stay away from this.
 
The Russell 2000 continues to hold up well on a relative basis, and the price relative line is still in a mild up trend. CMF on the tracking ETF IWM is relatively higher, which may be significant in that there is less selling pressure here. It is still in the upper half of it's trading range, but did break the simple 50dma today. This is a potentially bullish sign, but not enough to bet on. One reason for it's relative strength may be the same reason for it's big cap brethrens' weakness - No QE3. The small caps are hurt, not helped, bu a declining dollar, and with dollar strength lately there may be a thesis out there that these will do much better.

KiM Jong Il stole the show in one of the funniest movies of all time, "Team America: World Police". Here is a "best of" clip:



We will miss you, buddy.

I will have the new highs update shortly.

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