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Tuesday, January 22, 2013

Daily update 1/22

The Dow made it above its 2012 high today.  Here is the chart.

I am not sure what TradeStation is doing with the volume, LOL.  We can see it closed above the resistance line today.  However, we cannot say the same for the COMPX yet.  If this market is going to go a lot higher it will need to participate.  Lets look at the SPX daily chart.

Price is still extended from its 18 SMA.  It is getting fairly extended from its 50 SMA as well now.  Lets zoom in to the 195 minute SPY chart.

We have back to back blue bars on this time frame indicating SPY closed above the upper Bollinger band and is extended.  It is also about the same distance above the 50 SMA as it was at the peak in Sept.  It is hard to see how there won't be a profit taking pullback coming here pretty soon.  There is a difference in the volume pattern between now and last Sept.  There were two sets of green high volume bars.  One  in early Sept. and again at the top.  The first pullback found support around the area where the last set of big volume bars were.  In late Oct. the sell off found support at the first set of high volume bars.  When the low of that first set was broken is when the market accelerated down into the final low.  We don't have any high volume bars so far around the current high.  We have high volume at the late Dec. low and some on the big gap up.  I have marked those lows with green lines as I suspect there will be support there if tested. 

The biggest problem here for bulls is the short term extended price in SPX.  Will it be able to hold 1475 on a pullback?  If it doesn't we have a failed break out situation.  Will that spark some extra selling pressure?


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