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Thursday, September 27, 2012

Daily update 9/27

The bulls showed up as the charts indicated they should from last night.  However, the sub intermediate trend is downgraded to neutral.  Here is the daily SPX chart.

SPX closed back above the 18 SMA, but on a significant decline in volume.  A close above today's high would be a big positive for the bulls.  A close back below the 18 SMA would be a big negative.  Lets zoom in to the 130 minute SSO chart.

SSO closed back above its 50 SMA this afternoon, but did not follow through yet.  There is a little more room up to the upper trend line for tomorrow.   We relieved the short term over sold pressure today so it will take people willing to push price higher from here to go up.  Lets zoom in to the 60 minute chart.

The most obvious thing on this chart is the lack of volume today.  The red resistance line is at the circled low.  There was several days of buying above that line and there could be resistance there.  SSO stopped a few pennies below it today.  There are green bars so there is upward pressure in the chart in the very short term, but the 18 SMA is sharply pointed down.  That tempers the bullishness a bit.  I don't know how this will play out, but I see two likely scenarios.  The more bullish scenario would be to retrace this up move back to around the 18 SMA and reverse back to the upside.  That will flush out some of the potential resistance above the red line and correct today's rally.  The more bearish scenario would be to continue up to the upper trend line and roll over.  That seems likely to embolden sellers which could add to the potential overhead resistance.

With the short term trend down and sub intermediate trend neutral it would  now be easier for the bears to take control of this market.  We need to be cognizant of that fact, but realize that the burden of proof is on the bears to indicate they are willing to do so.


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