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Thursday, June 13, 2013

Business As Usual

Surprise, surprise, we bounced again off the 50dma. This time it was a pretty strong bounce, on increasing, if still low, volume, so there is a pretty good chance this is going to continue. We have a lot of resistance here, and it may take a couple of weeks to get through it, but it now looks fairly likely we are going to retest the previous high. Judging by the rapidly rising ATR line, we are also due for some volatility.

The bounce in the Nasdaq 100 is quite a bit weaker, but it successfully tested support and still looks like it is going to go higher, but it also looks like it will have more of a struggle. However, it will move up if the rest of the market does.

This seems to be where the current leadership is: the Russell 2000 had a big day today, after a very mild pullback, and is almost a cinch to retest to old high. If we have a breakout into new high ground, it will be here first.

Last week I took a look the the stocks listed on Finviz listed on the NYSE. If I included funds alsong with stock, I got approximately the same percentage above the 50dma as this indicator gave, which means this apparently does include funds,. Since bond funds are taking a horrible beating, this is going to be skewed by that, and for the time being cannot be considered a reliable indicator. Too bad, because it is about the best one I have found.

At least the Nasdaq hasn't gone bonkers yet. This is still bullish, but still trending down. It should get back above 70 withing the next week or so, and sometime later peak somewhere in the high 70s or 80s. At that point we can start to expect the market to form a long term top, and star to begin a major correction. Of course, there is a possibility it will keep declining here, in which case we can say goodbye to any last gaps rally, and just expect a slow bleed all summer. I don;t think that is the most likely scenario.

It appears that yesterday was the last gaps for the bears as we retested support and passed, and got a pretty powerful bounce today. This could be just a bounce back into resistance, but it could also be the start of anothr strong move up. At this point it is inconclusive, but the next few days should tell us more, and in a wekk we should have a clearer picture. Until then, it's probably business as usual.

I will have the new highs update shortly.

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