As a child one of my favorite Saturday morning cartoons was Astroboy. My parents had a television in their room and on Saturday morning after they left the room I would sneak in, climb into their big bed, snuggle down and watch the black and white Japanese anime (only later in life did I realize that Astro Boy was really Tetsuwan Atomu, translated from Japanese “Mighty Atom” and was an important data-point in the development of anime). There is a new Pixar type animation movie reviving the title coming out this week and between the advertising for the movie launch and our new market launch I have found myself singing the Astro Boy opening theme song all week.
There you go, Astro Boy,
On your flight into space
Rocket high, through the sky
For adventures soon you will face! …
… Crowds will cheer you, you're a hero,
As you go, go, go Astro Boy!
Here is our ES chart:
Our latest correction came down and touched briefly the 6% pullback area and has steadily marched back. Overnight the ES has rocketed up locking out those not invested of the 2% to 1% area. Hopefully this AM’s gap will sell a little and give us chance to play in that 1054 – 1064 range.
Getting up and over 1065 will stop the pattern of lower highs and once again put us on the path to set yet another post March high in the market.
Yesterday’s close was problematic for me. Our Zweigs put in a little crinkle. Those in the trading room get to watch live the A/D lines as I drew a line in the sand of where we needed to close to keep the Zweigs happy and we missed considerably.
As a result, our Zweigs have a down-turn during an upward thrust, which when this has happened since the March bottom has been a precursor to a failed thrust such as in the beginning of July.
That was the negative side to yesterday’s close. On the strength side the new 52 week highs were coming in fairly strong making me doubt any type of real selloff.
This is our Russell 2000 new highs which were the strength yesterday. We did not surpass the new high count from the day before, but intraday even with a weakish A/D lines investors were willing to buy in fairly strongly the day before’s new 52 week highs. Quite a bullish indicator and this is what gave me backbone to climb aboard BGU on the double bottom to ride the rally into the close. The way this indicator works is our 5 day moving average pointing up confirms a bull leg, pointing down confirms a bear leg. The next couple of days the bar to keep the 5 day pointing up are very low so we will be in this mode for a least two more days.
One thing to note here is our ability to make new market highs with lower 52 week highs on the RUT. Our largest RUT 52 week new high day was in the middle of July and we have made 3 new market highs since then. We will have to watch to see how high we get during this leg.
The market says higher, the underlying sentiment says higher and the hypothesis for the valuation of the market will be tested over the next few weeks during earnings season using two data points. The first affirmation will be that the bets that drove the summer rally had been correct, that is to say that the earning hit their expectations. The second affirmation and the most important will be the expectations that are set for the year ending quarter and beyond which will allow more money to flow into the markets which is what we need to drive up the market to even higher levels. A failure to appease could pull the rug out but for now it looks like go go go Astro Boy.
See you in the markets
Marlin aka Redliontrader.
