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Tuesday, October 23, 2012

Daily update 10/23

SPX closed below the key support zone today.  Here is the daily chart.

SPX closed below the lower channel line of the uptrend since the June low and below the 50 SMA.  It also closed below the spring high.  That puts us in a failed break out situation.  We have a blue price bar so price is extended below the lower Bollinger band.  We also have a FED meeting tomorrow.  Once upon a time you could count on there to be a gap up on FED day.  However, the FED put out a paper some time ago outlining the affect on the market.  I assume this was to make sure it was widely known so that it would stop happening.  It remains to be seen if it will keep happening now that  most people know about it.  Will we have a bounce tomorrow?  This looks like a market breaking down, not just quick pullback.  The next key support is in the 1396 area.  There should be resistance in the 1425-30 area.  This chart looks like there could be a lot of stops somewhere under that 1396 area.  We could accelerate down if that level is broken. The 200 SMA is at 1375 and the high from last year is 1370.  There should be support in that area.

If we get a bounce tomorrow, I expect it to be short lived.  The sub intermediate trend is firmly down at this point.  We are in sell rally mode.  Be extremely careful on long trades.  Remember cash is a position.


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