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Market Backs – Off Just a Tad September 5, 2014

Posted by Tom in Thoughts.

Wednesday we saw at move higher with a Closing price below the Open and the previous Close . . . . on increased Volume.  I’ve labeled this as a “mini-buying climax” (bc ? on the chart).  I call it “mini” because while volume did increase it was not a blow off / panic level.  I expect next week to be rather weak and listless, but it all depends on the news at this point.  BTW, this is a tentative Disruption structure, but it definitely needs to play out more to confirm itself.  Just a pause would be ‘Re-Accumulation’.  We’ll watch for an up thrust on low volume or a sudden down draft (no demand / heavy selling).  I doubt we will see either, but I like to label things pessimistically . . . it makes me pay closer attention.


Also note the “Money Flow” (red histogram) chart at the top.  Still positive but weakening.  This is likely a” pause that refreshes” the market before the next move; and that’s OK.  We’ve come a long way is a short period of time and things need to settle out for a few days.  My Sentiment indicator remains positive, but one of my Price Trend indicators did turn down.  No red flags at this point.  (as always, you can click on any graphic to enlarge it for easy viewing)

I noted that the VIX (options put/call ration, a sign of optimism / pessimism) is unusually optimistic, so I picked up a small position just for a little insurance.  A cautious hedge since I’m pretty well invested in here.  In the last 3 days I’ve seen the number of “possible buy” stock candidates go from 5-8 per day down to none.  That kind of confirms this pause scenario.  So we’ll watch for any sudden, wide bar (spread) moves on high volume (very bearish right now), but I’m not expecting that unless a big news item hits.  This market is susceptible to that right now.

Have a good week and remain patient.          ……………  Tom  ………………


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