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Friday, November 16, 2012

Daily update 11/16

Looks like the buy signal is kicking in.  Here is the daily SPX chart.

That is a pretty decent looking reversal candle.  The buy signal I mentioned last night seems to be kicking in right away.  Most of the time SPX will contact its 18 SMA before the bounce is completely over.  That is up at 1397 now.  You might recall I was looking for a test of the 1395-1400 area before the last break down.  Maybe the market will give us that test now.  It can be a bumpy ride though because of the technical damage.  Lets zoom in to the 130 minute SPY chart.

The first bar this morning was a blue bar indicating price was below the lower Bollinger band.  SPX tested yesterday's low and was repelled like mad.  Good clue to exit shorts.  Lets zoom in to the 60 minute chart.

That was a good bit of volume on the big rally bar.  SPY pulled back and made a higher low and resumed the rally.  I went long for a swing up since I got my buy signal yesterday.  SPY ended the day with a confirmed break of the 18 SMA so all swing shorts should have been closed out if they were not already.  In the absence of bad news on Monday, we should get a good rally going.  Most of the time after this buy signal there is a rip the face off the shorts rally day.  If we get above today's high on Monday morning do not fade the rally.  Look to be a buyer.  Most of the time the market will keep creeping up all day.  If there is a dip in the afternoon it should be a buying op.   A break of the hourly 18 SMA would signal the market is not ready for the bounce yet.  This market has had a lot of damage and sometimes the big rip roaring up day turns out to be a one day wonder.  A rally here is counter trend to me.  I tend to be much quicker to take swing profits and look to enter again on pullbacks.  Those pullbacks can be pretty big sometimes.  Since I have never seen this signal occur with the VIX this low, I really don't have any idea how this will play out.  We will have to kind of play it by ear.  It could be different then usual.

The rally seemed to be sparked by news out of Washington that both parties were interested in making a deal.  This will likely be a buy the rumor and sell the news event. I need to write up an article on why that will be the case. 

Chart practice has been updated with TER the stock for today.

The market status system is showing all 10 items with weekly red charts.  That is a lot of technical damage.  I would not expect the market to just go flying straight up.


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