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Thursday, September 5, 2013

And There Goes The Volume

While we didn;t ge much of a follow through on yesterday's move, and volume dropped off quite a bit, we didn't sell off, wiher, so for now the bulls still have it. One thing of not here is that MACD histogram, which is usually a quicker indicator of momentum than MACD itself, has formed an interesting divergence: is was rising while the market was hitting a lower low. That may or may not be significant, but I suspect it is.  Whilw we are still below resistance, and it may be tough to get through, right now it looks to me like the market is determined to rally this month, and I expect just that for at least the first couple of weeks.

The Nasdaq 100 has the same divergence, although not as pronounced as the lower low was not a whole lot lower. This also looks determined to rally, and if i gets to a new high, you can bet it will.

The Russell 2000 looks slightly less deternined, and is starting to look weak in comparison. That will not be conducive to a long term rally, and I do not expect a long term rally here. If anything, I think we are about to have the last blow off stage of the 2009-2013 bull market. Whether we top this month, next mnth, or early next year, I do believe we are getting close.

The percentage of stocks above the 50dma, here on the NYSE, has been perhaps the most reliable forecaster of market health in 2011-2012. Here in 2013, it has worked, jjust not quite the same, and here is getting confusing. We dropped slightly below the 35% line last week, just barely low enough for a correction but not low enough for a bottom, and reversed back up. While it is premature, according to this, to call the correction over, a move above 50 will put a sock in the bears' mouths, while another trip below 35 will kill the bull.

The Nasdaq isn;t anywhere near correction territory here, and has crossed back above 50, about where we would see a follow through day. Here, the probability is tha we are in for another bull move which will take this above 75 again. although a sharp reversal is possible, just not very likely. Alos, note here the same divergence in MACD histogram I noted on the other charts. I think we are about to take off.

The rather pathetic correction we have been in since early Augus appears to be over: although I did not get to check if IBD called a follow through day, I suspect we will get plenty of other in the next couple of weeks.

I will have the new high update shortly.

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