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Market Consolidating December 5, 2014

Posted by Tom in Thoughts.
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Monday of this week threw a scare into traders as the markets were down sharply and closed near the bottom of the daily range.  The rest of the week was a kind of “back and fill” with most of the losses on Monday being recovered.  Friday (the last bar on the chart below) was a very narrow bar with the Close near the Open and at mid range; a sign of indecision and lack of commitment.

NASDAQ

With a great jobs report out on Friday you’d think that there would be more of a reaction, but no.  Take a look at my “Sentiment” indicator and the two “bumps” downward this week.  True they only went to Neutral, but it shows that folks are getting more concerned here.  That coupled with the “Money Flow” (red histogram) above the chart and we conclude that this market is treading water.  No unusual volumes either high or low, so I’m thinking this is a pause / consolidation after the rapid price increase that we’ve had.

We’ve retreated back to within the red channel lines, so that’s OK.  I’ve spotted in at near term / secondary price support at Mondays low at 4724, though the major support remains at 4650 (IMHO).  Let’s just be patient here.  Markets don’t going rocketing up forever and a pause would be a good thing as long as we don’t see volume very low on up bars (No Demand) or very high on down bars (Distribution).

I call your attention to my monthly client newsletter under that tab.  In it you’ll see the overall market Price Strength and Money Flow charts as well as the top & bottom sectors.  A reminder: double click on the chart to enlarge it for easy viewing.

That’s all for now.  Have a good week.    ……….  Tom  ……….

chart by MetaStock, used with permission

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