– Ben Bernanke
Remember those words? I quoted them the post of August 27. How many market days since August 27? 13 days. What was the daily range of S&P on August 27? 1040ish to 1060ish. Where did S&P close today? 1121.
Is that just coincidental?
As I mentioned last night, future market gaps in a Sunday evening are not very common.
Whatever the reason, markets went to work to drive the prices higher.
This is a weekly chart
It’s been doing alright. Has got above the MAs, has forced a MACD cross, has taken the RSI above neutral, has got beyond the trend line that passes through May and August peaks. The week is not over and the picture may change, but as long as index stays above the MAs, it should be alright. If it carries like this, it may make the MA alignment positive by the end of the week.
This is a daily
So far, bulls have done everything we said they should have done. They just need to hold the MAs on pullbacks so that they finally get in a positive alignment. I would like the bulls not to fall back in the red zone. I would also like them to stay above 1090. Of course, the thing they must really do is to better the August high.
Daily volume expanded but came below average. Daily breadth was very good
Hard to argue with breadth
Now let’s see what one good day can do to breadth of the chart below
Hard to argue with breadth! If bears are still in the game and marginable, they better get to work soon
I would like the bulls to improve the percent of stocks above 200 MA. I would also like them to take BPSPX higher.
A host of well-known gurus, cycle masters, and market theorist have been calling a top since last week of August. I know a couple who said over the weekend that this week market shall top for good. Some of these guys have very spotty track records and only excel at promoting themselves. One of them once said that he could never be wrong (!!!!!!).
Yet, some have been very good over the past months (years) that I have known and heard of them.
Market is internally overbought for the short term and susceptible to a pullback which may look fast and furious
And McClellan looks like it needs a break
But A/D line has been leading. And Summation has been making new highs. It would be a spectacular reversal of fortunes to get a top and collapse out of nowhere with breadth leading like that.
Yet, everything is possible and those who pump it over a few hours can dump it too. Remember, all it takes is a no bid tape.
Still, I play my game, follow my levels and try not take anyone that seriously.
This is a 60-min chart
Once again, it seems like 60-min chart is running out of momentum. We are uptrending short term and divergences are just warnings.
A move below 1110 may put the short term uptrend in jeopardy.
I have taken profit (should not have done so in hind sight ;-)). I have done some hedging and lifting and re-hedging. But more importantly, I have been setting, and raising multiple levels of exits/concerns. Currently my levels are 1110, 1100, 1085-1090.
Before leaving you, let’s look at the chart of USD
That’s one hell of an ugly candle. A lot depends on the Bucky of course. A break above the congestion zone may send shock waves through risk assets. A break below may bury bears and top callers.
Remember what Bernanke said?
“First, the FOMC will strongly resist deviations from price stability in the downward direction.”
In the post of August 27, after quoting Bernanke, I said:
“Some think he’ll fail. Some think he’ll succeed. I really don’t care what others think. He may fail in one time frame and succeed in another. I just want to know what Bernanke wants to do. Market will decide on his success or failure in one time frame or another, and, hopefully, I’ll follow the market and end up OK through this mess.”
We may be very close to know the market’s decision.
Have a Nice Evening!
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