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Thursday, July 12, 2012

Daily update 7/12

We filled the big gap up and bounced from there.  Check out the daily SPX chart.

The trend line defining the up move is a bit hard to figure out exactly where it should be.  Depending on what low is used we are either above it or below it.  Take a look at the last three price bars and compare them to the first three price bars in the circled area.  They are so similar it is amazing.  That move down started from a position of fairly strong breadth and a lot of longs as noted in the NAAIM survey I posted about in http://traderbob58.blogspot.com/2012/07/bear-fuel.html

The bulls are clearly trying to hold the market up, but so far have failed to win the battle.  If this market keeps going down it will cascade just like it did in May.  Since we started from a significantly lower high, the cascade could be bigger this time.

Here is the 130 minute SPY chart.

We had a blue bar indicating price was extended as we filled the big gap up this morning.  That helped fuel the mid day bounce.  We still have red bars and failed to close above the 6 MA.  Check out the 30 minute SPY chart.

Just like yesterday we have several upper tails on the candlesticks indicating resistance.  The last bar was down on heavy volume.  There might be some follow through from that, but hard to say in this news driven environment.

The McClellan oscillator turned negative today, but the 10 DMA breadth chart is still slightly positive.  We have a short term over sold condition with six down days in a row.  This is based solely on price, we are not over sold in terms of breadth or VIX.  We are also flirting with the up trend line so a bounce is possible.   I am not sure it is likely though.  There are plenty of big green volume bars in that 30 minute chart, but we keep going lower.  The bulls have been unable to sustain a rally for more then a few hours.  The best strategy appears to be selling rallies.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.