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Wednesday, July 18, 2012

Daily update 7/18

Retest of the 7/3 high.  Here is the daily SPX chart.

SPX slightly penetrated the upper trend line.  I am not too sure it will be able to stay there.  Another thrust day up and we could keep going.  The breadth charts are saying that is probably the lower odds outcome.

Here is the McClellan oscillator.

You can see a significant divergence on this retest.  In addition, tests of prior highs and low below the +100/-100 threshold are somewhat prone to market reversals.  Another strong up day would help this chart.

Check out the 10 DMA breadth chart.

There is a slight negative crossover today.  Retests of highs and lows with this chart crossed the wrong way are prone to big reversals.  Remember the SPX breadth chart already had a negative crossover a few days ago.  The volume in the lower panel is clearly crossed over.

Here is the SPY 195 minute chart.

Price is in the middle of the up trending channel formed since early June low.  We had a hanging man candle at the end of the day.  There is enough of a run up here that it may indicate a pullback in the morning.  I changed the upper red line to green now that we are above it.  In theory it should become support.  However, given the breadth picture I do not have much confidence it will hold if tested.  If the market reverses from the mid point area and tests the lower trend line the odds of a break down do go up some.

This is a critical juncture for the market.  Do the bulls show up and bid prices higher or do the bears show up and ruin the bulls party.  I do not know what the odds of a reversal are, but I do know the consequences. The overall up move is weak in price.  Just look at the chart.  We have made higher highs and lows, but with deep pullbacks.  This is a market struggling to go up.  If we turn down this time with breadth negative, the odds would favor a test of the June low is in the works.


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