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Tuesday, June 12, 2012

Daily update

Today is a perfect example of why I have been showing intraday charts like the 130 minute.  Yesterday the SPX daily chart had a very bearish looking candlestick pattern.  However, I wrote this about the 130 min. chart last night. "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."  The bulls showed up again this morning.  Here is a look at the SPX daily chart now.

We ended the day still below the slanted red resistance line.  However, we did go up on a slight increase in volume.  Volume overall the last several days has been pretty light though.  We have a four day consolidation forming that should lead to a good move once we break out.  Clearly we have people in both the bull and bear camps.  The question is which side has the bigger hammer.  Lets take a look at the 130 min. SPY chart.

This chart is showing a possible head and shoulders topping pattern forming.  We ended the day working on a right shoulder.  This is a potential pattern and we don't know if it will play out yet or not.  Notice the big green volume bar this morning.  That looks pretty bullish doesn't it.  Here is what it looks like on the 60 min. chart. 

That big green volume bar turns into a big red volume bar followed by a smaller green volume bar on this time frame.  Over the last three days the biggest volume bars have all been red.  This chart does not give me a lot of confidence the bulls will win this little battle.  Volume analysis can be tricky because it can look very different on different time frames.  I look at several to see if it is clearer on one over another. 

I don't think we will be in this trading range too much longer.  I guess we will just have to see whether the bulls or bears show up tomorrow.


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