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Wednesday, January 23, 2013

Daily update 1/23

I guess the big news today is AAPL is down a big in after hours trading on its earnings.  Will that cause a bit of a chill on the market tomorrow?  They did a lot of crowing on TV today about how IBM and GOOG earnings were a big boon to the market.  However, SPX was only up .15% at the end of the day.  Here is the daily SPX chart.

That is one extended chart with no shake out move all year.  That kind of pattern can end with a big thud as all the fast money players bail out at once.  I wrote last night that SPY was as extended as it was at the top in Sept. and due for a pullback.  Maybe the earnings miss by AAPL will be a catalyst.  Lets look at the 195 minute SPY chart.

After the Sept. top, SPY did not bounce significantly until after it hit its 50 SMA.  That happens pretty often after the blue bars.  That seems likely in this case if we do actually have a pullback.  Unless something jumps out at me I would not be looking for a long swing trade until we get down into that area which is just above my top green support line.

Keep in mind that SPX dropping back below 1475 could usher in some more selling.  That would mean we could have a potential double top in play.  Since most people are raging bulls these days, that could end up being the correct pattern and a deeper sell off occurs then most are expecting.  There is a lot of internal strength in the market that usually would mute the sell off.  However, we had a lot of strength at the high before the flash crash in 2010.  There is no guarantee of anything in the market.  Should we go below the Sept. low of 1393 we would have to start thinking about the sell off turning into a margin debt unwind which would likely go much lower.

Chart practice has been updated with BIIB the stock today.


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