Daily update

Friday I said "All I heard the last few days is that Europe will bail out the Spanish banks this weekend. I don't know whether that is going to happen or not, but I am pretty sure the market has priced it in if it does.  If it does not happen, look out below.  There may be a sell the news reaction even if they do."

Today was certainly a sell the news reaction.  The bounce appears to be over.  Here is the daily SPX chart.

We did indeed have trouble at the red line I added on Friday.  We clearly still have some resistance up in that area.  The market started down right from the open and never looked back.  Notice the price bars around the 18 SMA in the yellow box.  SPX could never make a higher close to indicate a break of the MA, then turned back down today and closed slightly below it.  This should be short term bearish.  I have added a green line for potential support at the May low.  If the market gets down there and turns back up, this pattern could turn into an inverted head and shoulders bottom.  I think that is lower odds then testing the June low because of the pattern around the 18 SMA.  Here is a look at the 130 min. SPY chart.

We clearly broke the uptrend line this afternoon.  We are still above the 18 SMA and closed right at the 50 SMA.  This chart is not outright bearish yet, despite the look of the daily chart.  I think we have transitioned back into sell rally mode.  However, we need to see some follow through on the down side tomorrow to be sure the bulls are back in the barn. 

Bob