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Monday, December 17, 2012

Daly update 12/17

Exhaustion?  Here is the daily SPX chart.

Today's close was a new high for this rally.  That darn totally random market stopped precisely on our key trend line, LOL.    Will we break it or be turned back?  Lets zoom in to the 195 minute SPY chart.

The reversal candle on 12/12 is the highest volume bar of late.  Today's last bar was pretty good volume also, just slightly lower then the other bar.  The last candle looks a little like a hanging man.  I don't really think this chart is providing much help on whether we break out to the upside or reverse.  However, there are some things that look a bit like warning signs.

Lets start with the breadth chart.

I marked the last three swing highs with vertical lines to make it easy to match up the breadth data at the bottom of the chart.  There are a lot of similarities.  This suggests the odds of another pullback coming are non zero at least. 

Another chart that is kind of interesting is the new highs.

I circled the number of new highs for today and for the election day.  That was the last major swing high.  Notice they are just about the same level.  They also dropped considerably from where they were on rally days the last two weeks.  Those numbers are also well below the numbers at the swing highs in Sept. and Oct.  Remember I showed the NAAIM survey of active money managers on Friday.  It showed the second most bullish reading in the last two years and I said it showed they were all in.  I think the number of new highs being so low today validates that assumption.  If they were still piling in, the number would have been higher then it was today.

Next up is the daily VIX chart.

The VIX is above its 6 and 18 SMAs and both are sloped upwards.  It has clearly been diverging now from SPX for a few weeks.  I have mentioned this before, but we have not resolved it yet.  This is in a short term uptrend.

SPX is clearly at a decision point.  I have seen some pretty big sell offs from internals similar to what we have now.  The market looks a bit exhausted.  Will we break out or reverse and sell off?  I think a decision is at hand.

Chart practice has been updated with AAPL the stock today.


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