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Monday, June 25, 2012

Daily update 6/25

Yet another big gap day.  The news flow is not real kind to bulls these days.  Lets start with the daily SPX chart.

We closed below the 18 SMA with a red price bar.  We need a close below today's low (1309) to confirm a break of that MA.  We are at the bottom of the linear regression channel indicating a short term oversold condition.  Both the McClellan oscillator and the 10 DMA breadth charts are still positive so it is hard to say if the rally from the 6/4 low is over for sure.  However, it is definitely on life support.  Here is the 130 minute SPX chart.

We got a blue bar this morning showing price extended on this time frame.  We can see a lot of congestion in this area since 5/21.   I hesitate to call this a support area because of all the slop in the chart, but it could be. We don't really have any good price action to place a meaningful down trend line yet.  I think the best bull/bear line to use for now is the hourly 50 SMA up near 1339.  That is far enough away we could have a significant bounce and not disturb the short term down trend.  In the absence of bad news in the morning a bounce seems likely.

The inverse head and shoulder bottom pattern that was all the rage has clearly failed.  However, the ABC correction pattern is looking pretty good so far.  If that is to play out all the way, we should see new lows eventually.


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