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Monday, July 23, 2012

Daily update 7/24

Are we headed lower?  Here is the daily SPX chart.

We gapped down below the lower trend line and out of the triangle this morning.  However, it appears the market really does not want to make a decision as it ended the day just below the triangle.  Since we are running out of time there will be a definite decision soon.  Check out the 130 minute SPY chart.

We gapped right through our first potential support line and under the price channel of the entire rally.  This afternoon price went up and just kissed the under side of the lower price channel line.  This is often referred to as a kiss good bye.  I believe that is what happened today.  Here are the breadth charts.

We now have clear negative crosses on everything for the first time since the early June low.  This looks like sell rally mode to me.  We don't have any good price action to draw an upper trend line on so the 60 minute 50 SMA is probably a good bull/bear line for now.  This morning's low hit a trend line connecting the last two lows.  A close below that trend line would be a confirming sign the rally is over. 

I have heard so many people on TV saying that the Europe situation is priced into the market.  My question is simply this.  If the outcome is unknown, how can it be priced into the market?.  What I think is priced in is a nice neat and clean solution.  If such a solution was possible it would have already been done by now.  This reminds me of early 2008 when everybody was saying the subprime mess was priced in.  Then Lehman happened.  The stock market has a history of ignoring things until all of a sudden it can't ignore them anymore and crashes.  Spain is in big trouble and Italy is not far behind.  Some day it is possible the market stops ignoring this.


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