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Thursday, July 19, 2012

Daily update 7/19

Looks like a bit of indecision here.  Lets start with the SPX daily chart.

We closed slightly above yesterday's high.  Notice we touched the upper line of the regression channel today, putting us in clear over bought territory.  This candle is a bit hard to define.  I think the SPY daily chart shows it better.

This looks like a spinning top candlestick.  The open and the close are in the middle with wicks both up and down.  This indicates indecision and makes a lot of sense here.  The market is at a critical juncture.  Check out the 30 minute chart.

We had two strong candle closes above the channel center line, but the very next bar were even stronger sell bars as both closed below the low of the prior bar.  So we had a little bit of profit taking in this area.  There is something odd in the new highs.

We closed at new rally highs today, but despite that we had the lowest number of new highs in the last five days.  We also have a general divergence in the numbers with the area around the 7/3 high.  I wonder if the poor economic data gave some people a little pause today.

The market is clearly overbought in the short term.  I think in order to go higher it will need some consolidation.  I just don't think people are going to push price up at this juncture.  That should become evident if they keep buying the dips and hold the market up.  With the breadth data the way it is a close back inside the daily triangle would likely start a move to test the June low.  Triangle patterns are not real reliable on which way they will break.  However, when a break out fails, the odds do go up on the other direction considerably.


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