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Monday, January 28, 2013

Daily update 1/28

A seemingly innocuous day, but was it?  Here is the daily SPX chart.

There was a bit of a hanging man today.  It looks like 1500 is providing some round number resistance.  SPX is clearly stretched and people have really chased this market.   Is it time for a pullback?  Here is the latest breadth chart.

The McClellan oscillator closed at 54 today and is starting to show some divergence from price.  A down day could turn this negative for the first time this year.  The stocks vs their MAs chart may be more significant.

All three of the indicators have turned down now, even the number of stocks above their 50 SMAs.  People are clearly taking profits on some stocks now.  This could signal the beginning of a pullback.  Next up is the VIX chart.

The VIX took a pretty big jump for such a mild down day in SPX.  This is another possible sign of a pullback. 

Will the market follow through on the down side tomorrow?  There are some warning signs tonight.  Remember on 1/24 we had a very high number of new highs like we had at the market top in Sept. which looked like another buying climax.  This looks a lot like another top.  Remember that the COMPX still has not gotten above last year's high.  That means if the market does pullback here there is a possibility this is the final high of the bull market.  The sentiment picture sure looks that way.  If that is the case the market should fall away pretty fast once it gets going.  The final high in 2007 came on a reversal day and was very obvious.  However, that is not the norm.  Most of the time they look much more like the current chart where the market runs up and just stops without any real obvious negative price pattern.  This looks like a market in need of a pullback.  Any more then that we will have to determine as the price unfolds.

Chart practice has been updated with GLW the stock today.


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