Wednesday, December 17, 2008

12.17.08 - Bullish Pullback


No contradictions in that title! After a morning pullback to the daily pivot (SPY $90.60), the market has found strong support at that level and is attempting an advance. The Cumulative Tick and the A-D lines look very healthy. I also like the relative strength in Consumer Discretionaries (XLY -0.09% vs XLP -0.34%). Although down volume has edged out up volume, the two are mostly keeping pace with each other as the Trin attempts to bullishly fall back under 1.0. All this leaves the major indices down less than half a point at the mid-day.

You may note my twitter posts on TBT. I am also keeping a close eye on the Dollar (UUP -1.15%) versus relative advances in the highly overbought foreign markets (ie EFA -0.26%), as well as Treasuries versus Corporate spreads.

12:28PM PST - Volume is so low we are getting pushed around; VIX remains lower vs. the open. So - so far so good, but I don't like the repeated tests of VWAP support going into the close. A-D has flattened, so watch it.

[Add:] Note how the Dollar (UUP) now lies just above it's 200-day moving average. Will it find support there? As bad as it looks for the dollar, the currency world is all relative and things certainly aren't any rosier overseas, so I'm supposing it will. Downward velocity admittedly looks grim though. Patience will pay; I'll keep tracking it.

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