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Tuesday, August 21, 2012

Daily update 8/21

Hmm, I guess I was right about one thing.  It was easier to get above the April high then it was to stay there.
Here is the daily SPX chart.

We ended up with a reversal day on an increase in volume.  That would be two days in a row with bearish candlesticks.  Will it follow through this time?  Here is another look at the 2007 top and how it played out after the Oct. reversal day.

Notice the volume was not particularly heavy on that reversal day.  Most people did not give any particular credence to the price bar at all.  It will be interesting to see what people say this time.  We can see a slight bounce the next day and then down to the 50 SMA before the first real bounce.    The weekly chart is still pretty strong which is similar to 2007.  There will be dip buyers along the way.  If SPX closes above today's high it would change my outlook.  I think that is the lower odds scenario though.

Here is the 60 minute SPY chart.

We ended the day still above the 50 SMA and bounced going into the close.  The bulls are on the ropes, but have not lost the battle yet.  Today will have emboldened some bears, but are bulls ready to back down or not.  I suspect tomorrow we will get a better read on the bull's will.  I think they only have a couple of days to get that close above today's high or the bears will become much braver.


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