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Friday, July 6, 2012

Daily update 7/6

The employment report did indeed shake things up a bit.  Now we need to see what happens next week when earnings start up.  Here is the daily SPX chart.

We have a neutral price bar today, but we are still above the 18 SMA.  That SMA is also moving up to add to the positive back drop of the daily chart.  Both breadth charts are still strongly positive as well.  We dropped back below the prior swing high setting up a possible double top.  We also dropped back below all the overhead resistance from back in March and April.  You could probably make a case either way for the market based on this chart. 

Here is the 130 minute SPY chart.

On this time frame we have red price bars, but price is holding above the 18 SMA.  This chart is still positive, but on the edge.  The new red line is at this morning's high.  There is potential resistance there that must be conquered for the rally to resume.

Here is the 30 minute SPY chart.

Today was a good example of exactly how random the market is.  It just happened to randomly hit my support line at 134.85 to the penny and bounce, lol.  One thing very obvious on this chart is that we have a big gap on both sides of price.  I am going to go out on a limb and predict that one of those gaps will be filled soon.  There was a lot of volume in the last 30 minutes, but price ended up in the middle of the bar.  In the absence of bad news, I suspect the bulls will try to rally on Monday.  If we get above today's high, a full gap fill would be the logical target.  It is very important for the bulls to get SPX above the 7/3 high and that down trend line on the daily chart.  The bears have economic data on their side, if earnings results start to support their case, look out below.  I would not be surprised to see the gap above filled and the market roll over and sell off.


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