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deGraafsDaily

Thursday J une 7, 2012

IntermediateTermBarometerIndustryGroupTechnicalRankings

JeffreydeGraaf,CMT,CFA RobGinsberg AlexMeintel,CMT technical@renmac.com 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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