Current Breadth Readings: (click here to see all our breadth charts)
I think we featured the Zweig yesterday, but I want to do it again today. I had expected to see a major leg down, but in fact, there was enough improvement by the close to garner a fairly decent number. The writing on the wall is further selling at some point. Today, hard to tell. The bears would like another follow-through day, like a really nice 10 more handles down to send the message that we are in control and the bulls are standing aside. If we see buying, then the market is telling us they are interested in bargains. Watch the tape.
The bears would like another 10 down from here, just to show some control and garner respect. They have to convince the bulls to stand aside or else get hurt. They are not going to do that if we bounce and break through that 1407 area.
We think that it’s inevitable that we will eventually get to that oversold area on the Zweig, which we need, in our opinion, to get the end of the year-, Santa-, holiday-, recovery-rally moving again. It may not happen until the bears are shaken apart a time or two, but we think that is a goal and those numbers will be ugly as we break 1300.
The Obama sell-off was actually a European sell-off. You can mark the start of selling on comment out of Europe and the low of the day was marked by the closing of the European markets. That means that the coupling of the Euro/US markets remains, and we are partnered in an awkward 3-legged race and right now Europe is falling behind and dragging us with it. That causes the Dollar to rally. We have the 81.67 target ahead, expect further stock weakness.
Here comes that TLT breakout. Watch for 125 and just go by whole digits. We think 127/128 are possible upside targets. If we are wrong here, we will blame it in on strong intervention.
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