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Wednesday, October 2, 2013

Crisis Du Jour

 Here is a somewhat clearer view of this month's pivot points. So far, it looke like we are in range between P and R1: while I don;t expect to stay there all month, the first one to break will tell us whether we are in for a bullish or bearish month. So far, things look bullish: we did get a sell signal on the Elder impulse chart this week, and it has so far not followed through, and a false sell signal is normally very bullish. Notice also tha CMF is rising due to a series of closes in the upper half of the day's range; that may also be a sign of institutional accumulation. For the short time horizon (about a week), all systems sill look bullish.

The Nasdaq never even gave us a sell signal, false of otherwise,and is now on a new buy signal. We are approaching the R1 pivot, which will probably provide some resistance, but I would be surprised to see it hold all month: R2 is probably the most likely target here.

Even the NYSE composite is looking bullish: a bounce off the 50dma, rising CMF, and strong support at the P pivot point. Voluem so far is slightly favorable to the bears, but that could change if we get some on the way up.

Ticker Relative Strength Index (14)
XLY 60.14
XLB 55.9
XLV 54.73
XLK 54.39
XLI 53.83
XLE 52.9
XLU 49.42
XLF 46.47
XLP 42.44

Here are the sectors ranke by RSI. There are no surprises here, and RSI levels are low enough to give us a good deal of room to mive up.

XLY has been substantially out performing the markeet for the better oart of the last two months, and is accelerating in the rate it is out performing. Price relative went almost straight up during the last pullback: if the market is now going into an up trend, this could really take off. 

XLP continues to drop, and last week gave us what turned into a valid sell signal, which means this is in a bearish phase. Underperformance from the defensive sectors is bullish: defensive sectors collapsing is pretty troubling.

The market, after yesterday shrugging off the government shutdaown, seems to be showing some strain now, but so far, it looks like the di buyers are moving in. If so, we shuld get a pretty good move up once this "crisis" is resolved, which it will be.

I will have the new highs update shortly.

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