Daily update 2/1

I guess there will be plenty of stories written about the Dow closing above 14000 for the first time since 2007.  I didn't realize how close we were.  It makes sense to get there.  I think the weekly chart of the Dow is worth a look.

The weekly chart shows a blue bar so price closed above the upper Bollinger band and is extended.  Notice we started making the high in Sept. on a weekly blue bar.  Same for the weekly SPX chart.

That is pretty extended.  This would be a good place to top.  Remember we are in the area of the trend line I showed the other day on the monthly chart that has capped all the other rallies.  Lets look at the 60 minute SPY chart.

That is one massive volume bar this morning.  I wonder if this was an exhaustion gap.  Here is the stock vs their MAs chart.

None of the indicators got back above their MAs.  All are showing a noticeable divergence.  The McClellan oscillator closed at 47 today which is lower then the 57 at the last high close.  This is extremely low for a major milestone.  One more important chart is the daily COMPX.

The COMPX still has not gotten above its Sept. high.  It has a blue bar on the daily chart so it is also extended.  The volume pattern looks like distribution to me.  There are more big red bars then green.  I happen to think this is important.  Since I have not seen anybody else mention it, I think I am in the minority on that one, LOL.  However, when one is calling a top the more in the minority they are the more likely they are correct.  I can assure you there are many blog readers out there that think I am crazy.  I guess we will see, maybe I am.

Given the divergences we have and the over the top bullish sentiment I believe there will be buyers remorse next week.  Today looks like a possible exhaustion gap.  Feb. has a history of doing the opposite of Jan. pretty often.  I believe the market will take notice that the much feared spending cuts that were put off for two months are going to happen anyway.   I suspect the two months was to allow the defense companies to send out the 60 day layoff warning notices required by law.  Its kind of funny really.  The fiscal cliff everybody was so worried about is happening, just in stages.  I guess that makes it all better, LOL.  The only question becomes how long before the market starts to worry about it again.  I guess we shall see.

I am running short on time tonight so no stock for chart practice.  I hope some of you caught that nice move in BIIB.

Bob