1. The SPX now has 90% of stocks above their 50MA, which is very bullish, however this is an overbought condition, so we may anticipate some sideways movement in the very least. On the other hand, a lot of money that was on the sidelines is coming back in to the market.
2. Our AA position is performing quite nicely. The correlation of AA with the SPX has increased to 77% and its inverse correlation with the dollar to 76%. The full stochastic is overbought however. AA is resting right below the current pivot point. Note that the top of AA’s keltner band is about 11.2 and the 50CCI is still below the zero line, which suggests AA has plenty of room to rise. Note that AA broke resistance at 10.26 and 10.47. One the daily, next resistance is 11.54 and on the weekly 11.2 and on the monthly 15.88. Observe that AA is well below the kumo in all timeframes. Very bullish on AA.
2. GE has been underperforming the market and our position has an irritating loss currently. Note the 50CCI and the full stochastic are overbought though the stochastic is declining. On the daily, GE is in the kumo and has several resistance lines to deal with. We can expect volatility until it breaks out of the kumo. On the weekly, GE has been fighting resistance at 16.63 and is well below the kumo. On the monthly, GE is fighting resistance at 16.59 and is rapidly approaching the kumo.
3. BAC is has been underperforming the market and our position has a very small loss currently. On the daily, BAC has broken above resistance at 6.61 which will now be support, and next resistance levels are 6.97 and 7.3, the latter of which is also the kumo. The full stochastic is approaching overbought but the 50CCI merely indicates a nice uptrend. Woodie’s CCI is over the 100 level which is bullish. The weekly and monthly Woodie’s are still in downtrends but are moving steadily toward the zero line. On the monthly op-ex candlestick chart note the bottoming candle with high volume.
4. The Sunday feed of Seeking Alpha market currents writes
9:43 PM “The 21st Century may be American after all,” writes Ambrose Evans-Pritchard. “Re-inshoring” – the process of jobs lost to China coming back – is a new buzzword as U.S. manufacturing has subtlety become very competitive. Additionally, the country is closer to energy self-sufficiency than commonly believed, and about to get more so. Toss in the best demographics of the major economies and the continuing EU troubles, and it’s advantage America.
Couldn’t agree more. Buy America and go away.
5. From a contrarian point of view, the major thing the SPX has going for it is all the fear and negative sentiment, which I think, as I speculated previously, soon disappear.
6. Nov is seasonally bullish. We have the Europeans on Wednesday and the Fed meeting in early Nov, both of which will probably cause volatility but in the end we should see bullish reactions. The Europeans have no choice but to get their act together and it is seeming increasingly likely that the Fed will do some form of QE with mortgages, both of which should amplify seasonally bullish tendencies.
7. IWM broke consolidation range–here and with AA, the breakout remains bullish until proven otherwise.
8. Financials as a whole have had 3 up days in a row. (BAC 1 day.)
9. Gut feeling? Some consolidation Oct 26-28 to alleviate overbought conditions, however, the overbought conditions might get overwhelmed by money rushing in.
10. Seriously considering going long GLD…
