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Monday, October 1, 2012

Daily udpate 10/1

Who is in control of this market?  Here is the daily SPX chart.

It was the first of the month (usually one of the most bullish days) and SPX was back above its 18 SMA for the second time from a short term oversold condition.  What happened next was a complete failure of the bulls to come to the party.  Lets zoom in to the 130 minute SSO chart.

We got above the upper trend line early in the day, but failed to stay there.  Notice how the volume picked up a lot in the afternoon.  It gets even odder.  Check out the 30 and 60 minute charts.

In the 30 minute chart, the biggest volume came on an up bar.  The 60 minute chart shows the biggest volume on a down bar.  Is that a bullish or bearish volume pattern?  I don't know, but it is odd to have the highest volume of the day at that time of the afternoon.  The bottom line is we ended up making what I called the more bearish scenario of testing the upper trend line and failing.  Are we headed back towards that lower trend line?  We are still above the upper support line.  The bulls may try again tomorrow.  I don't know how many more chances they will get.  The dip buyers probably need to get some satisfaction soon to keep them playing.  If the first support line gives way again, price should head to the lower support line.  If we break the upper down trend line and can stay there, then a retest of last month's high should be possible.  In between the two lines it is undecided.  It seems to me the path of least resistance is down, but I guess we will see.

Chart practice has been updated.  Today's stock is NFLX.


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