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Tuesday, October 15, 2013

Stall Speed

After 3 straight up days on declining volume, it was no a surprise that we took a drop today, if for no other reason than  simple profit taking on those astute enough to buy on the drop last week. However, volume was a little on the high side today, which could be a problem. We stopped well short of the R1 pivot point, so it is possible we are not done going up, but it is also possible we will pull all the way back to  P pivot point, which may just be enough to scare the momentum traders. It looks to me like this is shaping up to be a buy the dip opportunity, as long as volume cooperates.

Crude oil is appraching converging support at the 200dema, S1 pivot, and the psychlogically important level of 100. The pace of the drop that started in September is slowing, and it looks like, if we hit that support, this might also be a buying opportunity.

 Gold continues to sputter, but is also at a critical support level that looks like is going to hold. If it does, we could be in for a pretty decent up side move, and if we get above the August high, then we have established a medium term up trend. If not, and we break support here, I will be looking for a retest of the June low. That could be a much better buy point, but i is not certain we will get there.

Well, this is really getting weird. The yield on the 10 year is now moving like a thinly traded penny stock. It is up against resistance here, a break of which could lead o a big move up, a failure a big move down, or we could just continue barely moving. We probably won't know until Thursday, the "default deadline".

UUP was up today, so I would assume the Dollar index was as well, but this is still in a down trend that began in early July. If it continues, we should see the equities market rally. If not, and this reverses trend, we will see equities head into a correction. A some point this is going to stop dropping, but when is a total unknown right now.

We have the pause hat the bulls were waiting for, but it came on higher volume than expected. That by iself is not a disaster, and this market is so news driven that trends can change on a dime. It is inevitable that we will have a resolution in Washington: the unknown is how he market will react. If we get the majority leaning heavily bullish, we could get a "sell the news" event.

I will have the new highs update shortly. 

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