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Tuesday, July 3, 2012

Daily update 7/3

There was a lot of talk about a rate cut by the ECB at their meeting on Thursday which seems to have propelled some more buying today.  Here is the SPX daily chart.

Looking at the weekly chart in my market status system only 4 of 10 charts are green despite the strength so far this week.  I have moved my ABC correction pattern letters around because I can't rule out this is still a corrective move.  Defensive sectors are still outperforming the more traditional risk on sectors.  There have been a lot of new highs which is a sign of strength.  However, new highs can fold quickly and do not make a good all clear sign.  We will just have to see how price develops because this is a very odd looking chart for a major low.  We have a blue daily bar, so we are outside the upper Bollinger band and subject to a pullback.  For three days the market has not sold off for more then about 15 minutes.   There must be a lot of eager bulls out there.  Chasing the market like that rarely works out well.

Here is a look at the 130 min. SPY chart.

There is a hanging man bar at the end of the day.  That may bring a bit of a pullback on Thursday morning if we don't have a big gap up on ECB rate cut news.  If we do gap up, I would expect there will be some profit taking with price being so extended.  There is some room up to the upper trend line for more upside though.   This looks like an unusually wide price channel.  It is a long ways down to that lower trend line.  I suspect the 134.85 support line will be tested in the days ahead.  The market has to have a pullback some day.

I hope everybody has a great 4th of July. 


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