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Wednesday, January 30, 2013

Daily update 1/30

Was that it?  By it I mean the end of the bull market.  This looks a lot better then the Sept. high.  At that high I thought it would be retested again.  It wasn't until after all the distribution over the next few weeks and the post election gap down that I changed my mind.  I should have known better.  Just about every time I change my mind in a situation like that I turn out to be wrong, LOL.  I have to say that this one looks much more appropriate for an ending high.  Here is the daily SPX chart.

We got the first white bar on this rally today.  That was a pretty interesting reversal from yesterday's strength.  Lets zoom in to the SPY 195 minute chart.

Both volume bars today show a change to distribution.  We will have to see if that continues or not.  We had a couple of distribution bars back in early Jan., but none for a while.  This chart looks pretty innocent, but there are other things going on.  Lets look at the breadth chart.

Despite making a new bull market high today, the McClellan oscillator closed slightly negative.  This is very rare and indicates a short term exhaustion condition.  This is a pretty reliable indicator for at least a short term pullback.  At the Sept. high it was 172, giving the market high odds of a retest after a pullback.  That happened in Oct. twice before the real pullback started.  With a negative reading today and 57 yesterday at the closing high, it is likely to play out differently this time.  Breadth is painting a much weaker picture then it was in Sept.  Here is the stocks vs their MAs chart.

This chart deteriorated considerably today.  At  the high in Sept. all these indicators were on peaks.  All three have diverged from price recently.  There is a big divergence in the 10 DMA part of the chart.   In looking at this chart and the breadth chart I think the market could fall away much quicker then it did in Sept.

Chart practice has been updated with BSX the stock for today.
Anybody looking for long term holds might want to check this one out.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.