Monday, December 14, 2015

Data does not support end-of-day reversal

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Contrary to what we saw in the markets with the Industrials up +0.60%, the NAS up +0.38%, and the SPX up +0.48%, the underlying data doesn't support the reversal.


Click on the image to view a larger version.

If you're not familiar with the presentation, review yesterday's blog (as well as others).

If there was broad, across-the-board buying at the end of the day, we'd see the white line above start to cross the slower moving averages from below.  At best it showed minor stability -- it certainly isn't enough to support a move of several 100 points in the Dow.

You can also see in both the top trace as well as middle trace that (top) we continued to see new 52-week new lows (red line), and in the middle trace, that computer selling continued into the close.

Tuesday is not a buying day.

My LCR Table suggests the same behavior:

Click on the image to view a larger version.

This is almost a mirror image of what I posted in Monday's entry -- red red red.  There was a bit of slowing on the right hand -- a partial green area approached, but it wasn't across the board and certainly, with red everywhere for Monday, Tuesday is a kick-back day.

Strategy

This isn't to say that we can't have a reversal from here -- we certainly can and the (approaching) oversold data shows it.  The point is that unless we see some follow-through buying on Tuesday it could be more of the same.  Perhaps the Fed has baked in everything they need to bake into the markets, but perhaps there will be a surprise.

Smart money is not taking the bait.  I'm not either.

I need to see the white line of the cumulative tick start moving upward, cutting across the moving averages.

I need to see the LCR Table start to show a sea of green on the right side, which will eventually lead to green on the left side.  We're not there.

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As with all my ramblings, you are responsible for your own investment decisions and I am not.  Please do your own diligence, and please take ownership for your actions.

Regards,

pgd