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Monday, October 7, 2013

Carbon Copy

Today was a near carbon copy of Thursday (on slightly lower volume), and we are seeing a pattern develop here: approach 1670 and he buyers come in , approach 1690 and they sell. This will probably go on as long as this "crisis" does, waiting for a resolution, which, if the pattern of recent "crises" holds, will result in a rip-your-face-off rally. When that happens is anyone's guess. While the pullback has been relatively mild, the length of time is getting into correction territory, and this probably won't be going on much longer.

 The Nasdaq is an entirely different market. This continues to hit new highs (except today) and sure looks like, if not outright accumulation, that there is a severe lack of sellers here. Price relative has leveled off after a pretty strong move up, but I don't expect that to last long.

I just can't get over how big a divergence we have in the Dow industrials. This is almost giving back the entire move from September (which itself came off another wierd divergence). It is pretty clear that mega caps are out of favor - why I don't know (or particularly care).

The Russell 2000 is also showing the kind of relative strength as the Nasdaq. The price relative line has droped more than that on the Nasdaq, which is not a surprise nor something to be terribly concerned about; this will normally drop more when the overall market is weaker, and the fact that it isn't by much mean the bull thesis is still alive and well.

The market seems to be positioning for a resolution to the debt ceiling- budget debacle in Washington. It's hard to believe that the powers that be will let this go on without a resolution, as, while it is no problem to cause hardships for the middle class, causing hardships for the big money boys in the stock market cannot be allowed.

I will have the new highs update shortly.

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