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Monday, November 26, 2012

Daily update 11/26

I want to start with the latest Bespoke SPX poll.  Here is the chart.


We can see two weeks in a row of way more bulls then there has been since the inception of the poll.  Now here is the weekly SPX chart.

Do you see any problems here?   Back in the spring in the midst of a strong uptrend there were more bears then bulls most of the time.  The market even topped out a couple of weeks after more bulls started showing up.  The same thing happened with the summer rally.  Now we are in a clear down trend and we have more bulls then bears almost every week.  The contrarian in me says there is very little chance we have made any kind of important low.  I have heard some absolute bulls*&t on TV with people trying to tell me it is time to buy.  I am sure these guys are all talking their book.  In the last few days I have been told the action in the transports is bullish.  I have also been told that tax hikes are bullish because they can make the economy stronger.  Neither person spouting these statements showed any research to back up their claims.  This is the biggest load of crap I have ever heard.  To me Wall Street is desperate to find bag holders for their inventory.  People fell for it twice, will they fall for it again?

Moving on to the daily SPX chart.

We had a hanging man candle today.  It started with a sizable gap down and the SPY chart looks completely different.  I don't really like it when it forms this way on SPX.  We will have to see if it is a bearish omen or not.  Bulls will say this was a nice consolidation at the highs.  However, after any strong move up or down it is common for the market to take a day or two before reversing.  I don't think it is safe to read this as a bullish day either.  Lets zoom in to the 60 minute SPY chart.

We are still testing into the resistance in the circled price area.  We also have the 200 SMA here.  The 18 SMA continues to rise up to meet price.  Will it kick the market higher or will price break down below it?  If we get another thrust day up it would be pretty hard to make a bearish case going into year end I think.  If we roll back over from here then I think the bears are still in control.  Creeping up a couple of more points here would not really give an all clear though.

I am not sure what to say about tomorrow.  We are at obvious resistance.  We are in a daily down trend.  We have very bullish sentiment.  All those things usually mean a good short setup.  I think we will get a decision soon.

Chart practice has been updated with GS the stock today.



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