SPX closed slightly above the 18 SMA, but does not have a green candle. This bounce clears the oversold condition. There was an increase in volume despite the day before a holiday. Just keep in mind that this particular buy signal is simply an oversold condition. It does not always lead to big rallies like the last one did, it can be a one day wonder type up move also. Lets look at the SPY 195 minute chart.
SPY does not have green candles on this time frame either. It is also still below the 18 SMA. Very high volume today. I am sure that was helped along by all the deal talk we got today. However, we still don't have a deal. I don't see enough here to say we have made an important low yet. Will the market follow through on the upside next month? I have absolutely no idea. What will the next sound bite out of Washington be? I don't see how the market can price in a deal we don't have. To be honest, unless the objective here is to crash the markets, I don't understand what they are doing. They keep telling us that going over the fiscal cliff is very bad. However, they never got all the key players together for a meeting until last Friday afternoon in the oval office. What were they doing for the last several weeks? I think I was correct all along. The Democrats do not want a deal. We will see if that holds up.
Bob
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