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The Big Picture Charts Look Positive


According to these DeMark charts, the bull market that began in 2009 is still not ready to quit.

Good morning and happy Monday. I'm not sure I can add anything earth-shattering to the refrains that "the market needs a pullback," "everyone is expecting a pullback, therefore it won't happen," "the economy is slowing but earnings are great," etc. etc. etc. My key market tell – corporate credit and selected credit derivatives – continue to hum along (see the Buzz & Banter, subscription required, for regular updates), with a few wrinkles here and there just to keep people honest; that suggests the bull market that began in 2009 is not ready to quit. It says little as to when we may have a 3-5% correction, and if the "wrinkles" get deeper it may presage something bigger, like the 2010 and 2011 summer drops, or last year's May-June pullback. But the underpinnings of the "big picture" are positive. So below I am going to offer some weekly and monthly DeMark charts which in a vacuum may be signaling the potential for some tradable turning points.

iShares Nasdaq Biotech Index (NASDAQ:IBB)

The weekly chart is flashing red. Last week printed a TD Sell Setup and a TD Camouflage Down bar. Think of TD Camouflage Down as action where price rises despite a preponderance of sellers. The monthly is on bar 12 of a TD Combo Countdown Sell, close enough to a 13 to warrant even more caution. But perhaps most telling of how extended the IBB is, the last three weekly bars have closed above the upper Bollinger bands, despite the fact that the bands have only been wider a couple of times in the last five years.
Positions in SPX NDX IBB and selected energy names.
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