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Thursday, January 31, 2013

Daily update 1/31

Back below 1500.  What now?  Here is the daily SPX chart.

SPX closed below yesterday's low and the 6 SMA.  The short term trend is down graded to neutral today.  However, it closed just fractionally above the 1/29 thrust up day low.  We have the makings of a reversal pattern, but follow through on the down side is needed.  Lets zoom in to the 195 minute SPY chart.

SPY has red bars on this time frame for the first time this year.  However, it is still above the 18 SMA.  Volume was fairly light today on both bars.  Lets take a peak at the 60 minute SPY chart.

SPY dropped below its 50 SMA this morning, then rallied back above it only to fail in the afternoon.  SPY ended the day below the 50 SMA, but needs to confirm that by a bar closing below that last hour low.  The bears sold two rally attempts today.  That is clearly a change of character.  The next chart is the 60 minute chart from when SPY made the high in Sept.  Compare the volume bars to the chart above.

Going into the Sept. high the big volume bars were mostly green.  It was not until after the high was made that the bigger bars were red.  In the chart above for Jan. this year. there are big red bars all through the chart.  From 1/17 to 1/25 the bars were green.  Starting on 1/28 the bars turned red again and that was before the rally high was made.  I think the volume pattern going into this high is much less bullish then it was going into the Sept. high.  I guess we will see what happens.

We need a little more down side confirmation before we can say a pullback has started.  I think that will happen though.  The late day sell off may be an indication the employment report disappoints tomorrow.

The Chicago PMI came in much better then expected.  I am not sure why they did not expect that, LOL.  This region is heavily influenced by the auto industry and Sandy destroyed 200-250k cars.  It should not have surprised anybody.  The market sold the bounce created on the surprise.  I don't know how long the bump will last.  That is a lot of cars to replace and that will help Q1 GDP.  The auto industry is a much smaller percent of the economy then it used to be and the surge will work through the system before too long.


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