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Monday, September 24, 2012

Daily update 9/24

The dip buyers continue to buy the gap downs.  However, they are not making any progress on the upside.  The SPX futures ended up closing below their 60 minute 50 SMA today.  Sellers were waiting at that 50 SMA as the market stopped dead in its tracks right there.  I have downgraded the short term trend to neutral in the market trend section.  Here is the daily SPX chart.

Back in Aug. we spent quite a few days below the 60 minute 50 SMA and never sold off significantly.  Will that be the case again?  Most people are calling the current formation a bull flag and expecting higher prices to come.  That seems to be a majority opinion so we will have to see how it plays out.  Here is SPX from the summer of 2007.

SPX broke out to new highs and even had a test of the break out level during the consolidation at the highs.  It ended up failing though.  We are consolidating at the highs, but it is not a given that we are going higher.  I don't really have any idea what the odds of a failure of this pattern are, but I know they are non zero, LOL.

Earnings surprise announcements are running more then 4 to 1 to the downside.  According to Bloomberg TV that is the highest level since 2001.  As far as I can tell all the good news is out on the central bank actions.  What is left is poor economic and earnings data for the market to deal with.  Will the fundamentals come back to the forefront again?  If we break down here instead of out to the upside I would say that means yes.

Chart practice has been updated.  Stock today is UTX.


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