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Monday, September 30, 2013

Minimal Damage

 Last news I have is that the government will shut down tomorrow, but i have not looked at any news for a couple of hours and I don't really give a flip. What is important is that we held two support levels today, the 50dma and the mid point between previous high and low.  We did so on slightly higher volume, which likely triggered a distribution day. A two week decline might normally put the market in correction, and IBD may have done so, but today was actually very constructive: leading stocks did quite well (as you will see on the price relative scan). So, this pullback/correction may well be ending.

Looking at the Nasdaq, any talk of correction is a joke. This is nowhere near breaking support, and is being bought up on even the slightest drop.It did close slightly negative, and on high volume, but I don't think this qualifies as a distribution day: if anything I would call it accumulation.

 The Dow looks like it is about to crash. Taken out of context, I qould be quite spooked about this, but taken in context, it is not that big a deal. It is, however, unusual for the Dow to lag this badly, especially when the market is relatively weak, and unusual behavior is something to keep an eye on.

Well, well, the Russell 2000 (the "anti-Dow") is not only accelerating in price relative, is not only positive on a badly negative day for the rest of the market, and is not only near a new high. it is sitting at the end of a very bullish cup and handle pattern. This is one of the more bullish indications in the market, and one of the reasons I did not go into a panic today. It looks like it is going to break out at any time.

The market cracked but did not break today. Unfortuantely this budget impasse will dominate the financial news for the next few days, and we will be held hostage, but so far, the damage looks to be either very light or non existant.

I will have the new highs update shortly.

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