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The Markets in Development Briefing for October 29, 2014

Below is the link to today’s Briefing.  The Fed statement is out and QE is over.  Now we will see if the current valuation of the Stock Indices is sustainable without help from the Fed.  While today’s action was basically “knee jerk”, what happens in the next two days, will be important.  The structure of the market is still very weak, so if the existing levels are to be sustained, it will have to strengthen.  If it does not, we will see more downside pressure.

The Markets in Development Briefing for October 29, 2014

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The Markets in Development Briefing for October 23, 2014

Below is the link to today’s Briefing.  As discussed in yesterday’s Briefing, the move down was countertrend to the rally over the last few days.   Volume today was extremely light, suggesting the rally is countertrend to the impulsive move down from the highs.  The Russell is once again diverging to the downside.  This afternoon the Indices started a move lower.  Volume began to increase.  I found this interesting.  If there is more downside tomorrow and volume continues to increase, it could suggest the move up is complete.  Watch Volume and the Russell.  Finally, the Indices are once again overbought with a divergence in the moving averages of Breadth.

The Markets in Development Briefing

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The Markets in Development Briefing for October 22, 2014

Below is the link for today’s Briefing.  While the Indices have reached an upper level where equality has been met, the move down today was not impulsive.  Therefore, unless we see a lower low tomorrow on increasing volume, the probabilities are such that the countertrend rally is not yet complete.  The extreme overbought condition yesterday has been corrected today.  This allows for a move in either direction, but the degree to which the overbought condition was worked off, suggests we may still see higher prices.  Volume will be the key in the next directional move in the short term.

The Markets in Development Briefing for October 22, 2014

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The Markets in Development Briefing for October 21, 2014

Below is the link to today’s Briefing. The rally today was certainly not at the top of the probability list.  Although, I did discuss the potential for a more complex countertrend rotation up that would take the Indices higher.  It now appears that is the case.  The NASDAQ and Russell have achieved equality at today’s high, but the S&P may extend up to the 1950 area.  The Indices have reached a point of being overbought in all three timeframes that I have not seen.  Volume continued to drop today, suggesting a weak rally.  However, Breadth expanded greatly, suggesting the rally was broad but with not much participation.

I still think the rally is countertrend to the move down from the highs. Unless or until volume confirms the move, the risk is sellers will step back in and we will see another move down to test the lows.

Tomorrow should be very interesting, unless of course, we get more central bankers trying to talk the markets higher.

The Markets in Development Briefing for October 21, 2014

 

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The Markets in Development Briefing for October 20, 2014

Below is the link to today’s Briefing. At this point and unless the structure of the Stock Indices changes, the rally off the lows from Wednesday is countertrend to the move down.  I can allow for slightly more upside tomorrow, but the Indices are poised for the potential of another good move lower.  Typically, the structure of a move will change with a news event.  There are no significant news events, unless there is a surprise Fed announcement.  I do not expect the Fed to take any actual action, but they may try to talk the Indices higher.

The Markets in Development Briefing for October 20, 2014

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The Markets in Development Briefing for October 15, 2014

Below is the link to today’s Briefing.  As suggested in last night’s analysis, the large move lower did occur.  It appeared at first the Fed may be providing liquidity to stop the slide but that was certainly overcome as the selling persisted.  There are now several pieces of information that suggest we may now see some type of intermediate term rotation back up.  Make no mistake.  The trend is down.  It will be important to analyze any rotation up for its countertrend characteristics.

The Markets in Development Briefing for October 15, 2014

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The Markets in Development Briefing for October 10, 2014

Below is the link to today’s Briefing.  Yesterday I suggested two potential scenarios.  The first was for the Indices to put in a lower low on diverging internals.  That would signal some type of rotation up.  That is exactly what occurred.   As the oversold condition of the market was worked off to a degree, additional selling came in this afternoon and pushed the Indices to new lows, testing extremely important support. 

Going into today’s low, the Indices sported additional divergences in Breadth and Volume.  The final leg down today, did not appear to be impulsive.  Just as I pointed out on Wednesday that the rally was impulsive in price but not structure, so too, today’s afternoon selloff was impulsive in price but not structure.   

I always have to allow for another thrust lower and then some rotation.  However, the structure of today’s afternoon move and the oversold condition of the Markets suggests some rotation back up.  How that rotation develops will be extremely important.  It will allow for re-entering short positions because the next move down will likely be a very good move.  Keep in mind, the trend is down.  The rally trend lines have been broken.  However, there are always countertrend rallies.

The Markets in Development Briefing for October 10, 2014

 

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The Markets in Development Briefing for October 9, 2014

The action in the Stock Indices today was very strong. While I pointed out in yesterday’s Briefing the rally was weak, today’s move down was about as strong as it can get.  This suggests there should be follow through tomorrow.  However, the Indices reached a point of being extremely oversold in the short term timeframe.  Therefore, there are two possibilities.

  1. The Indices will persist lower at the open tomorrow and will test lower support before finding a stopping price and rotating up to work off the oversold condition.  If this occurs, look to the internals to determine if divergences are developing.  If they are, then expect some type of rotation up.
  2. The Indices will begin a slight up move tomorrow that will work off the oversold condition without much price appreciation.  This will allow for another thrust lower on Friday or Monday.

There was a slight divergence between the S&P and the NASDAQ, suggesting the possibility of some rotation, but the Russell may have negated that because it closed at the low as is much weaker.

This is the link to today’s Briefing: The Markets in Development Briefing for October 9, 2014

 

Thanks,

Joe