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deGraafsDaily
Thursday J une 7, 2012
IntermediateTermBarometerIndustryGroupTechnicalRankings
JeffreydeGraaf,CMT,CFA RobGinsberg AlexMeintel,CMT [email protected] Importantdisclosureonlastpage
Strongest Weakest
WaterUtilities Metals&Mining
Distributors OilGas
&
Consumable
Fuels
MultiUtilities WirelessTelecomServices
RealEstateInvestmentTrusts(REITs)
Beverages
EnergyEquipment&Services
IndependentPowerProducers
&EnergyTraders
WednesdaywasthefirstpositivesignofaccumulationthismarkethasseensinceQ42011. Volumesexpanded,butmost
importantly,breadthregisteredanimpressive+7:1(A/Dstat). Theweekstartedwithonly13%oftheS&Pabovetheirown50
daymovingaverage,andover50%ofS&Pnamesmaking65daylows. Eachoftheseisconsistentwithanoversoldconditionin
equities,andwithtrendneutral,somepositiveresponsewascertainlywarranted,thoughnotourbasecase. Whatsmost
intriguingabout
Wednesday
was
the
historical
picture
of
simultaneous
internal
and
external
accumulation
days
(breadth
skew
andvolumeincreases)thattakeplaceinsimilaroversoldconditions(page4) OnenotabledeficiencyonWednesdaywasthe
unusuallyhighTRINreading. RegularreaderswillnotethatwefindTRINreadingsunder.50asrepresentativeofpowerful
volumeskews,andWednesdaysreadingmissedthatmark. SuchHighTRINaccumulationdaysoverthelast20yearsproved
tobetemporarylows,whilethethresholdlowTRINreadingsappearedtobemajorbottoms. WebelieveWednesdayopensthe
doorforamoretacticalmovethanwewereanticipating,butstillwithinadefensivebackdrop. The50daymovingaverage
standsashadeabove1360,andisdeclining,butrepresentsthelikelycaptothisrallyinouropinion.
Euro,gold,
10
yr
all
show
mean
reverting
tendencies
from
stretched
positions.
That
supports
an
equity
bounce,
but
not
a
resumptionoftrend. GoldbrokefromtheotherhorsesonFridaylastweek,andwillbekeytowatchitforsignsofpersistence.
Wedontlikeitfromatrendperspective,butbelievethemomentumistryingtoturn. 1523representssupport.
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