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Thursday, September 20, 2012

Daily update 9/20

That was the biggest gap down we have had in a while.  Here is the daily SPX chart.

We have a hanging man candle, but since it was created by the gap down I would not view that as meaningful.  The McClellan oscillator went negative today, but the 10 DMA breadth chart still has good separation on the lines.  Until they both get negative the bulls get the benefit of the doubt.  Lets zoom in to the 60 minute SPY chart.

SPY bounced off the 50 SMA and proceeded to fill the gap.  I have put in an upper trend line, but it is yet to be proven significant.  The trend line and the 50 SMA are going to come together and price is going to break one of them.  This does not look like a big enough pullback to spark major buying to me.  An upside break out might not carry all that far.  A downside break might be the bigger move since the market is still very extended.

One interesting event today was the trashing of the transports.  Lets look at the daily chart.

The transports are approaching the bottom of their trading range since June.  Will it bounce again or break down this time?  There could be implications for the broad market depending on what happens here.  IYT is an ETF for the transports that can be used to trade them.  This is a sizable trading range so a bounce or a break down should be a tradeable move.


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