A/D line Follow Up P/C ratio

We had our mild sell off if thats what it was, I personally think that they were distribution days where the big boys were locking in some profits. The volume was high and the indices finished in the red on one day and barely green the next. We have earnings coming out for the next two weeks, options exp tomorrow and goog blowing out numbers this evening. Inflation (core PPI and core CPI) came in above average but its difficult to tell if this is really a negative or not. Check out yesterdays (Wed Oct 18) blog from BigPicture.typepad.com There is a consenus from different bloggers about what this inflation theme means. For those who are wondering what core means it is the inflation data exluding food and energy (oil and gas). PPI= Producer ; CPI = Consumer

Also take notice on what was red today, $DJUSBK, $bkx (banks) and the $XBD (brokers). These were the two main sectors (financials) that lead this rally up.

We are devoloping a horizontal trend line on the 30dma (A/D line). It also tested the rising trend line and reversed.


The Smart money have rather quickly become bearish again, so a quick sell off could ensue soon. It would seem logical in my mind for the market to hold its course for another week or so that the dumb money can feel more optimistic and would join this rally. I read an article recently that talked about how the .78% fibbonaci retracement level for the S&P is around 1384 which would put the dow around 12100 to 12300. So we could see a move up to that area before a selloff happends. I am liking that scenario more and more especially with the dow closing above 12K.