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Wednesday, July 11, 2012

Daily update 7/11

Consolidation day.  Here is the daily SPX chart.

We ended up with a high volume doji candlestick between the 18 and 50 SMAs.  The big volume was caused by the release of the FED minutes.  Price swooned, but came back to where it was before the announcement all on a big surge in volume.  I am not sure we should read too much into that.  Here is the 130 minute SPY chart.

The bodies of all three candles today were very small.  Price bars are still red and we now have several closes below the 50 SMA.  Here is the 60 minute SPY chart.

On this time frame we can see many candles with upper tails indicating there is resistance near today's high.  Notice the 50 SMA is starting to turn down.  We can see we bounced off the confluence of the support line I put in last night and the uptrend line.  That last candle has an upper tail like the others so resistance was still there at the close.  Check out the daily VIX chart.

The last two bars are green unlike the last pullback to the 18 SMA. 

We have reached an important decision point.  Price is near the up trend line and the VIX is threatening to turn up.  Either the market turns back up and continues the up move or the sell off is going to get more intense.  Earnings news will likely be the deciding factor.  I think most people have come to the conclusion  now that there will be no QE3 in the near future.  That could mean that bad economic news will be viewed as bad again.  Something to watch for going forward.


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