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Thursday, January 10, 2013

Daily update 1/10

Retest of Sept. high in progress.  Here is the daily SPX chart.

Another new bull market high close.  Volume picked up a little bit today.  At the risk of sounding like a broken record, the market is short term extended and long term over bought.  Buyer beware.  A pullback to the 18 SMA before the retest would likely have been better.  Lets zoom in to the SPY 195 minute chart.

The first bar today had fairly high volume and so is kind of an accumulation bar.  I say kind of because the bar closed below the open and about in the mid point of the range.  The bulls won the bar, but the bears put up a fight.  The volume was also less then the two big red volume bars.  I think this pattern is actually worse then the one going into the top in Sept.  That big gap up at the start of the year has forced people to chase the market.  They are piling in at very elevated levels in an overbought market.  That often does not work out real well.  Is this one of those times?

SPX is about 2.5 points below the Sept. high.  I would expect we will exceed that tomorrow barring bad overnight news.  Then we will see if the sellers are lurking up there somewhere.  I suspect there will be people that bought the first leg up in Nov. wanting to take some chips off the table on the retest.  That could lead to some kind of reversal day.  If we close above the Sept. high tomorrow holding long over the weekend is probably a good idea.  I would definitely not go into the weekend short in that condition.


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