Crawling Into Resistance: Another Pennant.

Well, we saw what happened the last pennant we got.



To me, this one looks like the breakout will be to the upside. But that’s technicals. The problem is the dollar and it’s path. As the Euro weakens, the dollar goes up and our market tempers. I don’t think we’ll be hearing anything from the Eurozone PMs in the next week or so, so I kind of expect the market to wiggle around inside the pennant.

We did hear that the ECB wants Greek bondholders to take a bigger haircut than 50%, but the haircut is “voluntary”. I wonder how voluntary that is, because if a bank holds Greek bonds and refuses the haircut, the ECB might just not put them on the “Free Money” list. If the bank’s not real solid with not much Italian and greek bonds, they may refuse the haircut. But I think banks are hedging their bets WRT eurozone bond values.

Here’s one of my favorite indicators, the 3LB of the number of stocks above the 50 day MA. As you can see, we’re still stuck in that vertical bar which we hit as a result of the Central Banks’ statement of the obvious. But it’s higher than midpoint right now at 322.



I hate those huge moves. It throws all my indicators out of whack and I have to read the headlines. Today I learned not to steal gas from pipelines.


I actually wrote some code again. I’ve almost forgotten how to C. Anyway, I automated my herd’s relative strength versus the S&P, which saves me about 2 hours’ time. For the move up, here’s the latest herds report:


DIG : 7%
TAN: 5% (believe it or not)
CUZ XHB XES KRE ITB KBE XOP USO 3% (yes I know CUZ isn’t a true herd)
OIH SMH KCE 2%

SKF –11%
IGV – 5%
SLV –4%
GDX –3% (Ron Paul’s really taking this one on the chin)
IAU GLD IYZ –2%


Anyway, have a great Christmas season and new year.