Thursday, October 14, 2010

Let's Take A Second Look At September 21st’s Turn Date And The Price High Of 519.64 In The S&P 100

Our remarks of a possible turn date a month or so ago was in fun rather than anything I would bet my life on.  But the S&P 100, where most of the index derivatives are concentrated, hit 519.64 on September 21st, the turn date we anticipated in the prior week of September 13th.

There were numerous attempts to push price through that level after September 21st but they all failed.  That is very important because this is a leverage-driven market.   In other words, the only way to circumvent the negative supply and demand characteristics of this market is to employ leverage with a positive bias.

The S&P 100 finally pushed through and closed above the anticipated September 21st turn date's closing price on October 5th.  But it did so on collapsing advancing volume.

The intraday graphic above actually shows our anticipated September 21st turn date as the peak in the advancing volume data (shown in red).  Yet, the S&P 100, and S&P 500 for that matter, have made new highs.  But look how the advancing or constructive volume has fallen off of a cliff while the market has pushed higher.

I expect we could blow right back down through the September 21st high rather rapidly because of the failing participation in this rally..... unless we see a big change in market internals.  This market and many other financial markets are trading higher on leverage and fumes.   That includes gold.
posted by TimingLogic at 12:11 PM

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