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Wednesday, October 13, 2010

Wednesday, After the Close!!!

The percent of stocks above their 50 day moving average has now reached 93%, there is not much room to run any higher. This is an extreme over-bought reading now, and according to recent history, these extreme reading are tops!!!
The SPX broke above the daily Bollinger bands, recent history has shown that such a break has also marked a top of some sort.
The SPX finally had a decent impulsive wave up, that did not turn corrective intra-day, led by the Transports that were up 2.6%. Market internals we strong, but not near the levels seen earlier in this rally, and fit in nicely as the iii of the 5th wave up. All those corrective waves since Sept 20th have made it very difficult to get a reliable count going, but now we do have an impulsive wave to work with. The short-term wave count stays valid as long as the current 4th wave (black iv) does not break below 1168.68, which would put it with-in the price territory of the 1st wave (black i). Upside target on this count is in the 1210 range, which also happens to be in the same neighborhood that the 50 month MA (1207.16), and the 50 week MA (1114.80) are at, which both would provide some resistance. There is also that last open gap at the 1200 level that would love to be filled. As of now, the longer-term count is still valid, but the odds of it being the correct count is diminishing the closer the SPX comes to making a new high above 1219.80, and would need to be revised IF 1219 is taken-out. It is going to be very close, with the extreme over-bought conditions the SPX finds itself in, if it can make it before a sell-off of some sort occurs. OPEX Friday, and the following Monday could be VERY interesting, as both this days are very-unpredictable, and at times very volatile.
Breadth for the day closed at 3.27:1, advancers, on decent volume. Of the 1.16T shares traded on the NYSE, Up volume accounted for 72.13%. The earlier stages of this rally showed much stronger numbers, but over-all these are still respectable and work well as part of a 5th, and final wave.
The trend does remain up, and will stay that way until the SPX can start making lower lows.
* I am still collecting donations for the Community Fair, people have been very generous this month with their contributions, so please think about joining them and making a real difference for the kids this month!!!

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