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Friday, October 4, 2013

Friday Weekly Charts

 We had a confluence of support, but a pretty negative sentiment coming into today, so it was hard to figure out which one would win out. It was the support which, for now, is winning, but before taking a victory lap, the bulls should take a look at the volume, which was less than impressive. However, what was impressive for the bulls, not just today but most of the week, was the performance of leading stocks, which strongly suggests that we have hit a bottom here and are likely to rally.

The pullback is now visible on the weekly chart, making it more than just a pause, but not yet qualifying it as a bona fide correction. At this point, my guess is, because of several factors including the action of the other indexes, we don't go any farther down.

By "other indexes" I mean primarily the Nasdaq, which didn't even register a pause, much less a pullback. The rich get richer.....
...while the poor get poorer. The Dow industrials had a terrible week, which is normally good news for the bulls (when compared to the Nasdaq), but this is a little on the extreme side, and it is still causing me some concerns.
Nothing to be concerned about in the Transports. The up trend is intact, and unlike the trend from earlier this year, is actually sustainable.
The Russell 2000 is much like the Nasdaq; it had one bad day this week, but overall was up and hit a new high. Where this will stop is a guess at this point, but somewhere near 1120ish looks to be about the best I can come up with.

What could have been a disastrous week in the market was actually pretty damn good, assuming you were in
the right areas of the market. Obviously the mega caps are not, and the market shows no signs yet of turning defensive, so it is very likely we will be resuming the up trend shortly.

I will have the new highs update shortly.

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