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Monday, December 3, 2012

Daily update 12/13

Possible reversal day.  Here is the daily SPX chart.

SPX has a bearish engulfing candle.  It hit the 50 SMA this morning and that triggered some selling.  Volume was pretty light today, not exactly a textbook reversal.  Will it follow through or not?  Lets look at the 195 minute SPY chart.

SPY is still above the 18 SMA and the price bars have not turned red yet.  This chart is not conclusive on the down side yet.  Lets zoom in to the 60 minute chart.

I put in a green support line at the top of the multi day consolidation last week.  We closed right on top of that line.  That line was resistance for several days, will it be support now or not?  We are below the 18 SMA.  Lets look at the 30 minute chart.

There was a surge in volume in both the last two bars on this time frame.  However, price held above key support.  That made me chicken to hold short overnight.  I don't see enough to conclude whether we have started a pullback or if it was a single profit taking type day. 

Here is the current breadth chart.

We had extreme negative readings in both the McClellan oscillator and the 10 MA breadth chart right at the lows.  There was no divergence in either indicator.  This usually gives high odds of a retest of that low.  Now we have extreme positive readings in both indicators at the highs.  Now we have high odds of a retest of the high should we pullback here.  To make things more interesting, look at the last two price bars and the last two price bars at the low.  They are nearly mirror images of each other.  Did we just make a top and we are about to head south in a big way again?

If we follow through on the downside tomorrow then we will should break the up trend line on the SPX chart.  We are under the 50 SMA which is somewhat bearish.  However, we have strong breadth charts which is normally bullish at least for a retest of a swing high.  We could pull back to the daily 18 SMA and have dip buyers show up again.  It is also possible that all the dip buyers have piled in and we keep on going down for a retest of the Nov. low.  It could be a little tricky here in the short term so be careful.

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


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