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Monday, February 25, 2013

Daily update 2/25

In Daily update 2/22 I wrote "Today had no conviction in the volume or the number of new highs.  I suspect the bears will show up again next week."

I guess today qualifies as the bears showing up again, LOL.  Here is the daily SPX chart.

That is some bearish engulfing candle.  Those exist on a lot of indexes today.  The Dow actually made a new bull market high this morning before the collapse.  SPX has a blue bar indicating it is below the lower Bollinger band.  Since we were just testing bull market highs this morning it is hard to say price is extended on the down side except in the extremely short term.  The Bollinger bands squeezed together because of the very low volatility the last few weeks.  Usually when the volatility increases after a period like that it persists a while.  Lets look at the SPY daily chart.

The big red volume bars are showing more obvious distribution then the daily SPX chart is showing.  I think this indicates this is not just a 2-3 day pullback here.  Lets zoom in to the SPY 195 minute chart.

This morning SPY opened back up in the price channel, but could not stay there.  Both bars today had higher volume then the FED minutes induced sell off the other day.  This was a run for the exits.

We closed below the low of the last four weeks.  That put all those tiny dip buyers underwater.  The Sept. high was 1474 and the 50 DMA is at 1476.  There could be support in that area.  The question is how ambitious will the dip buyers be.  A lot of them just got their head handed to them today.  I have shown a number of charts in this blog that indicate this is the most crowed long trade I have ever seen.  I don't think they all got out today.  I believe selling rallies is the best strategy for now.  Tomorrow may be a bounce day, but I think the bears will be back again this week.

Chart practice has been updated with CCI the stock today.

The sub intermediate trend was downgraded to neutral today.


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