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Tuesday, February 26, 2013

Daily update 2/26

We got a little bounce back today.  After yesterday's drubbing that is pretty normal.  Here is the SPX daily chart.

SPX stopped right at the red resistance line which was formed over the last few weeks from prior support.  The bounce came off the top of the Keltner channel (dashed purple lines).  Volume was pretty good today.  The question is how stiff is that resistance at the red line.  Lets look at the SPY 195 minute chart.

 The first bar this morning had huge volume.  We started out with a big gap up and tested yesterday's low and bounced.  Price stopped on both bars at the lower Keltner channel.  Lets look at the 30 minute chart.

The biggest volume bar of the day is marked by the red arrow.  This was the bar that started the move down to retest yesterday's low.  The green arrow marks the start of the rally the rest of the day.  That volume dropped off considerably.  A lot of the volume today happened on the way down, not on the way up.  This makes it hard to say if the volume bar on the 195 minute chart is as bullish as it looks. 

Will the bounce continue tomorrow or will the bears show up again?  SPX stopped right at the underside of the price action from the last four weeks.  That could be significant overhead resistance.  New highs dropped down to 54 today.  Drops under 100 are often signs of a correction developing rather then a short term pullback.  We have not had more then two down days in a row so far.  This is keeping over sold pressure from building up.  That makes me think we are on the way to testing the 50 SMA before long.


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