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Thursday, October 3, 2013

Pawns In The Great Game

Technically we broke the P pivot point, and we are now entering bearish territory, but the bears have a litle problem with the tail on the candle, which indicates yet more dip buying, and a clear tendency by the market to buy up any drops going into support. Having said that, it is also becoming clear that the longer the budget impasse lasts, the more it is going to weigh on the market, and another couple of days might put us into a genuine correction. We are not, at this point, gaining momentum to the downside yet, and at best, it looks like we are stuck in neutral for the moment. Unfortunately, the political battle ground seems to be moving over to the market, which is probably where it will be decided.

The Nasdaq 100 also had a rough day, and while it has more strength in the intermediate term, in the short term it could lose a lot very quickly. It also broke through a support level today, but has tons of support below it. Any correction here, while in theory could be pretty nasty, in relaity will likely be very mild.

 The Russell 2000 also go hammered pretty good. Jus a couple of days ago we were looking at a possible breakout here; now we may be staring into the abyss of a break down. Unfortunately when the Russell changes trend, it does so very quickly and with little warning, so consider yourself warned.

 The percentage of stocks ablove the 50dma pn the NYSE has the look of a market that is about to go into a correction, bu we have a problem here: this never got into it's normal peak zone, which is usually in the low 80s. From here it is conceivable that it will reverse and go higher, but it is equally conceivable we could go lower. A break of 55 will be more definitive: if that happens, we will most likely head into a correction.

The same indicator on the Nasdaq is telling us a totally different story: this is still trending up and has yet to break 70, which it should do before we head for a correction. If tha is the case, then this "crisis" shuld end sonne and the up trend we were in should resume. That, I think, is the most likely outcome here.

The budget crisis is looming larger on the market with each day that passes, and unfortunately, it looks like the markets are going to become pawns in that chess game. Let's hope this stops before the markets decide to stop playing along.

I will have the new highs update shortly.

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