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Tuesday, November 27, 2012

Daily update 11/27

Interesting day.  The wild price swings in the morning are often a sign of a reversal more often then a continuation pattern.  That had me on alert for a short op in the afternoon.  The futures have been above 1402 on four separate occasions since last Friday, but were unable to stay there.  Since we are overbought in a down trend it is logical to have some kind of pullback.  Here is the daily SPX chart.

SPX had a hanging man yesterday and some downside today.  It is still above yesterday's low so there is still a chance for the bulls.  We will have to see if there is follow through on the down side in the morning.  Notice the down move today came on a pickup in volume from yesterday.  Lets zoom in to the 130 minute SPY chart.

The last candle was red and there was an increase in volume.  The volume pattern was never inspiring on the upside.  This chart is ready to roll over.  It just needs some follow through.  How about the 60 minute chart.

SPY closed below its 18 SMA.  The volume pattern does not look as bearish as the 130 minute chart.  I look at different time frames intraday because things can look different depending on when that volume falls.  Lets zoom in to the 30 minute chart.

The biggest volume bar of the day came in the last 30 minutes on that last down candle.  I held some puts overnight because this looks like a good reversal to me.  My sub intermediate trend is still down so I do not want to miss a short setup here.  Will it follow through tomorrow? 

Let me see if I can explain my thought process a bit.  I got an oversold buy signal at the Nov. low, but I did not see anything that made me believe that would be an important low.  The bounce was big and fast, but on puny and declining volume.  Nothing there to convince me I was wrong about the Nov. low.  This is what counter trend moves do.  The are sharp and short and suck a lot of people in the wrong way.  This is exactly what it looks like has happened to me.  I cannot begin to tell you how many bullish articles I have read lately.  None of them had any good technical reasons behind them.  You know how I feel about opinion pieces, LOL.  I showed the big surge in bulls in the Bespoke poll.  To me it looks just like dozens of other sucker rallies I have seen through two bear markets.  I want to have short exposure anytime it looks like the market might go down.  If we get back above that hourly 18 SMA tomorrow I will be out and waiting for the next op. 


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