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Friday, December 7, 2012

Daily update 12/7

I think we managed to squeeze out another day with no decision on the next big move.  I am going to start with the weekly chart this time.

That is back to back hanging man candles right at the under side of the 18 SMA.  If the market rolls back over this is a pretty bearish setup.  Lets check out the daily chart.

SPX closed fractionally above its 50 SMA today.  We now have a possible double top here.  Like the weekly chart, this is a pretty bearish chart if the market rolls over again.  Lets take a peek at the 195 minute SPY chart.

SPY closed slightly above my resistance line and above its 100 SMA.  We need to see confirmation of the move.  The market really labored this afternoon to get that close.  Will it be able to stay there and push higher? 

Here is a look at QQQ.

The Qs are showing relative weakness to SPX.  A lot of people watch this relationship.  Earlier in the year the Qs were showing clear upside leadership on the back of AAPL.  That leadership is faltering.

Here is another look at the breadth chart.

SPX made a new high close for the current rally while both breadth indicators continue to dwindle.  Like the other charts, this is very bearish if the market rolls over. 

Here is a look at the new high data.

The 11/3 reversal sapped the strength out of  new highs just as they were starting to build up some numbers.  We need to see some more days in the 200 range to sustain a decent rally.

How about a look at the weekly VIX chart.

The VIX closed below its 6 SMA, but above its 18 SMA.  Well that just clears things up a bunch, doesn't it, LOL. 

What  happens now?  The market has been struggling with the big gap down created after the election.  At the time I thought that gap was very important.  So far it has held the market in check.  I think trying to figure out the odds of something happening in the market is pretty tough.  I prefer to identify situations where a big move is likely if the market commits in that direction.  What these charts all say to me is that we have a high probability of a retest of the Nov. low should the market roll over next week.  For that I will be watching the hourly SPY chart very closely.  I think further upside will be a slow creep due to the fact there is still a lot of uncertainty in Washington and a lot of people are already long.

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


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