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Thursday, August 2, 2012

Daily update 8/2

The circus continues.  I wonder if the people that voted for Mr. Draghi are now wondering what the heck were they thinking.  I sure would be.

On to the market.  Here is the daily SPX chart.

We are in the middle of the trend channel now.  Price tested the 18 SMA this morning and it held for now.  The 50 SMA has turned up some which is technically bullish.  This is an extremely difficult pattern to analyze so be careful. 

Here is the 130 minute SPY chart.

Price bars have gone red, but we did bounce going into the close.  Whether that continues tomorrow or not will likely depend on how the market reacts to the employment report.  July is a very difficult month for the employment data.  Sometimes the auto industry shuts down production and sometimes it doesn't.  This year they did not.  The initial claims data was all over the place because of the seasonal adjustments.  I would think the employment numbers may have the same problem.  It may even turn out to be better then expected. With a lot of hopes pinned on more QE from the FED it may be a case of bad news is good and good news is bad.  I have no idea what the number will be or how the market will react to it.

Here is a chart of new highs.

We had the lowest number of new highs since back in June.  I commented a few times in July about how the new highs were the strongest market internal we had.  If that collapses so to will price.  If it drops under 100 for a couple of days the odds that we are in a new down move would go up considerably.

Here is the chart of the number of stocks above their 200 SMA.

This is on a sell signal with the 10 MA clearly below the 20 MA   Just about all the other internals are in the same condition.  Despite the daily chart looking somewhat bullish, holding long overnight is risky.  We had a lot of divergences on the last high and we have a lot of sell signals.  Don't fight the tape.

Don't forget to visit the new chart practice site if interested.  http://traderbob58-chart-practice.blogspot.com/


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.