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Friday, January 4, 2013

Daily update 1/4

SPX creeps higher.  Here is the daily chart.

SPX still has blue bars so it is still above the upper Bollinger band.  I probably should have mentioned this before, but it is not a good idea to fade a market until it gets back inside the Bollinger band.  They can creep up or down that band for a while and go a long ways sometimes.  This is a new bull market closing high.  Its about another 8 points up to the Sept. intraday high.  Can it get there on Monday?  Lets zoom in to the 195 minute SPY chart.

Volume in SPY tapered off a lot.  Both bars had low volume.  I think this is a symptom of the market being too extended.  Therein lies the problem.  When you have an important retest of a prior price level it does not help when the market is extended. 

I think the next few months are going to be interesting.  We are entering an earnings season that could ultimately have negative earnings growth in an overbought and extended condition.  Add to that the deal in Washington only put off the spending cuts for two months.  There will be much more haggling to come.   Buying here is high risk.


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