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Sunday, December 11, 2011

Market Thought... subtle bullishness

'Subtle bullishness'. It is hard to write these words, especially over the last 5 months.  Seems like every time I did, some headline or EU action came out that destroyed any subtlety.  However, now should be different because of what we know:

1. Banks will not be allowed to cause a credit event.

2. EU austerity is firmly in place.

3. Despite the ECB talk, they are and will continue to buy sovereign bonds.

A review of the financials and VIX suggest the markets are realizing this. The XLF seems to be chilling at technically significant level at its SMAs.

The VIX also saw an interesting sell off.  The sell off suggests an ease of immediate 'end-of-world' concern, and should see follow through barring any sudden negative developments.

Many individual names are indicative of the SP500 chart at the moment.

It sold off on the obvious 200SMA resistance, but bounced off the 360SMA.  The simple question becomes 'will the resistance hold, or will there be a breach?'

The above suggests a breach.  And to further support the thesis is the Dollar and the Ten yr.

The UUP seems like a short-term pull back for the dollar, which should facilitate markets and commodities.

The TNX is sitting on a potential low end support.

Barring a negative headline development, that can shift the current dynamic (like a sudden 'Greek Referendum type of headline') the markets should push higher.

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