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Thursday, July 26, 2012

Daily update 7/26

I guess the moral of this story is that if you can't actually find a real solution to a problem you just talk it to death.  We got a big gap up because the ECB is not going to let the Euro fail.  Really.  Does that mean that until today that was an option.  The last bounce that was caused by an actual proposed solution did not last long.  I wonder how long a bounce from a bunch of empty words will last.  I guess we will see.

Here is the daily SPX chart.

We ended up just below my lower trend line of the triangle pattern.  This market has really been trying hard not to make a decision on the next big move.  The thrust days of 6/29 and 7/13 had breadth over 80% positive.  Today we ended about 72%.  We did have a high volume day.  However, we ended the day very close to where we gapped open so it is a bit hard to say if that is real bullish or not.   The 6 SMA has crossed below the 18 for the first time since the June low.  Both the price chart and the internals are weaker then when we were last at this level.  Check out the 195 minute SPY chart.

Price bars are still neutral.  SPY tried to climb back up into the price channel but failed.  We did nicely fill the big gap down from 7/23.  We may have kissed the channel good bye again.  If the market turns down again we will have a good price pattern to draw the down trend line now.  Lets zoom in to the 60 minute chart.

We can clearly see that lower channel line was resistance all day.  I must have really got lucky when I put that on the chart.  It almost looks like I knew what I was doing, lol.   Even though we did not climb back into the channel we did close above the 50 SMA.  We ended with a high volume gravestone doji candle.  That looks suspicious for a little pullback first thing in the morning.  We have GDP coming out tomorrow and that could really shake things up.  Economists have been busy lowering their estimates the last few weeks.  There is a lot of data that looks recession like lately.  The actual number may be important this time.

We filled a big gap and stayed outside an important price channel.  We have a number of market internal sell signals.  I don't see enough to proclaim this the start of a rally.  I will need to see some follow through.  We are still in position to go down so the hourly 50 SMA looks like a good bear pivot to me.


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