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It ain’t what you don’t know that gets you into trouble. It’s what you know for sure that just ain’t so.

Mark Twain

The COT index number is +13.1%. This down from last week, but, we still have two weeks where the buying power of the commercials supports the bull side. Of course that the Fed decided not to “taper” in September provides a bullish impetus.

Technicals

Are very bullish. The 5day is almost at support in an uptrend. The support is at $170.4o. There is every chance that Monday, the market opens slightly weak, and then trades hard back higher. The 10day/20day are not in play this week unless the market sells-off and keeps selling, then look for support at $169.2o

Further the market made a new high. True it didn’t hold it, but that does not invalidate the pattern. Of course we are trading at the breakout point.

The approaching debt ceiling, sequester, etc, are all non-stories. We have had them almost on an annual basis, and nothing has come of it. All that we would be looking for would be a short-term top. This is a difficult game to play of course.

Internals weak

The market internals are weak with less and less stocks making new highs. This is a divergence within the market. Some analysts are calling for the market to fall based on this metric.

Bonds

With the Fed refusing to step away from bond purchases, the 10yr Note has traded off of the yield high of recent weeks. Lower Bond yields, if you feel that that is what is in the pipeline, would make stocks more attractive again. So the bond market is at odds with the internals. Further the COT traders do not buy individual stocks, they buy the index futures. Therefore I am not placing a high weighting on the internals per se.

Economic data.

Continues to be patchy, sometimes good, sometimes not-so-good. The market isn’t really trading on economic data. The market is trading [still] on the Fed.

There are no particularly attractive trades this week.

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