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Market Comes Back From Late Smack

But then, it's been getting a lot of practice lately.

The Market

Today did very little to change my view on the market. Sure, the action was sloppy, but it's been sloppy all week, hasn't it?

Breadth remains good and the intermediate-term indicators continue to rise. This is no different than we've seen for a few weeks now. Sentiment remains highly elevated, though. I would call sentiment complacent and today's action probably did not do a lot to change that complacency. Why would it when they smack the market late in the day only to bring it back at the close? Wouldn't that give you the sense that "they can't take 'em down"?

The Investors Intelligence readings for bulls chimed in at 59.5%, so it missed the 60% level. That's the good news; the bad news is that the ratio of bulls to bears climbed to 4.22. I have only seen this twice before. Once as we headed into Christmas 2013 and once in early September 2014. Here is the chart of the S&P with arrows pointing to the dates.

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Once again, I think you can see that we dipped slightly and then rallied again. I have noted several times that I think that is the way this ought to play out: a pullback and another rally. We've yet to get the pullback, instead we're getting the sideways move for now.

I went back and looked at the 30-day moving average of the a/d line and what it was doing during those two periods of time. Surprisingly, it looked somewhat similar to now. It might be difficult to tell, but in both cases the selloff did not arrive until the indicator reached an overbought reading (red boxes). It remains somewhat unclear as to when we might be intermediate-term overbought on this indicator, mostly due to the lack of positive breadth days strung together, but I can make the case for an overbought condition in early March.

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Also not terribly clear, but the McClellan Summation Index found that it too turned down coincident with the market in both cases. Note that for the September 2014 example, it was a significantly lower high than the previous high. That was not the case in early 2014.

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Thus I will stick to the view that we should pull back and rally again, and if the intermediate-term indicators roll over, then I will look for a more severe pullback. We'll keep early to mid-March on our screens.

New Ideas

I was asked if GoPro (GPRO) has a double bottom on the chart. We wouldn't know if it was a double bottom or not until it broke out over the rally in between the two lows; that is far, far away at about $51. But if you wanted to bottom-fish and look for a rally, then the stop is very close at a new low.

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Today's Indicator

The Volume Indicator is not yet overbought. It is currently 53%. I expect it will be in the upper 50s sometime later next week.

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Q&A

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The Italian market, the FTSE MIB, has had quite a run (along with all of Europe) but now finds itself at resistance. There is a longer-term measured target around 24,500 but I think we are more apt to see a sideways or corrective move before we get there. The main reason is that high from last June will likely get in the way as resistance the first time up.

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No matter how I look at the chart of Grupo Aeroportuario del Sureste (ASR), I see a stock stuck in a trading range ($138-$126, or maybe $118 on the low end). I suspect the resistance at $140 will hold for now, but if ASR can rally to $140 and then pull back, I might be inclined to like it more. I have drawn in on the chart how to make it look better. Otherwise, I lean toward a stock stuck in a range.

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TrueCar (TRUE) has some decent support in the $16 area and thus the bounce it is getting. If this bounce cannot get over $19, then the next trip down might measure to $10-$12. Obviously a break of $16 is a sign to get out. If the stock can get over $19, then perhaps it is just building an extended base. All those lower highs, though, have me in the camp that says, "Show me you want to rally first."

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