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Wednesday, October 24, 2012

Daily update 10/24

The market attempted to bounce, but that did not last long.  Here is the daily SPX chart.

SPX closed near the lows of the day.  It dropped fractionally below yesterday's low, but did not break down.  We are now 34 points below the 18 SMA which is fairly over sold.  That is combined with the blue bars indicating price is extended.  Lets zoom in to the 60 minute SSO chart.

We can see a possible double bottom forming.  Volume was significantly lower on the retest just as it should be.  This chart could turn up for a bounce pretty easily if the bulls show up to play tomorrow.  I think the bounce would be short lived though.  There is a lot of technical damage going on.

The USA Today Money section had an article on the profits for the third quarter.  They said that companies lowering guidance for the 4th quarter over those raising guidance is running 11 to 1.  The long term average is 2.4 to 1.   That suggests analysts estimates will be coming down for this quarter.  Earnings are expected to be negative for the 3rd quarter, but I found this to be interesting.  The article states that since 1953 fifteen out of the eighteen times that earnings went negative, they were negative for more then one quarter.   The average is 3.4 quarters of negative earnings.  The very last analyst estimates I saw for the current quarter were for 9% earnings growth.  That is down from 14% just a few weeks ago.  The statistics would suggest the odds are low that happens.  What affect will that have on the market?

Chart practice has been updated with CMG the stock today.


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