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Wednesday, December 26, 2012

Daily update 12/26

Downside follow through.  Bargain hunters remained on vacation today.  The short term trend is now down.  Here is the daily SPX chart.

SPX closed below the low of Friday's high volume down bar and below the 18 SMA.  It also had a red bar today.  I suspect some technical indicators will start firing sell signals on the daily chart now.  Lets zoom in to the 195 minute SPY chart.

The 18 SMA is starting to turn down pretty sharply.  SPY closed below its 50 SMA on this time frame.  It is also slightly under my first support line.  However, the amount it is below it is well within the dividend gap down range.  I would not consider that support line broken yet.  Lets look at the 30 minute chart.

SPY tested its 18 SMA twice today and was rejected.  There was a big volume surge at the close.  Will there be follow through from that tomorrow?  Here is a peak at the current breadth chart.

Both breadth indicators had negative crossovers again today.  It looks like the peak of this rally is behind us now.  We should be starting a test of the Nov. low.  The McClellan oscillator never got up to the strength it did after other sell offs in the bull market.  Remember we had extreme low readings of the daily 20 SMA of the TRIN.  You can read about it here: TRIN.  I believe this was the last gasp of the bull market and the bear will now assert itself.  If you have not developed your bear market plan you are running out of time.  This is likely the last time you will be able to make portfolio adjustments at these price levels.

I heard a guy on TV talking about a Gallop poll saying Obama was getting high marks for his handling of the fiscal cliff.  I would say he still has no incentive to make a deal and apparently is getting rewarded for not negotiating, LOL.  Over the cliff we go.  I also saw a poll from a week ago that was 57%-40% that we would get a deal.  Same poll now 50%-48% on a deal.  People are starting to figure out there will be no deal.  I suspect that is why there is no significant dip buying.  I think as we get closer to year end and there still is no deal the market will get more rambunctious on the down side.


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