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Thursday, February 28, 2013

Daily update 2/28

On the new bull market high close on the Dow yesterday, there was only one Dow stock that closed at a new 52 week high (HD).  That combined with the low number of new highs in general and the fact it was the only index to make a new closing high makes this look like a textbook bull market ending high.  Today's late date reversal looks pretty convincing to me.  Here is the daily SPX chart.

SPX had a gravestone doji candle today on an increase in volume.  This candle coming after a close back above the 18 SMA yesterday is a bearish combination.  I think tomorrow we will close back below that 18 SMA and the sell off will continue.  Lets zoom in to the SPY 195 minute chart.

The last candle is a bearish engulfing bar on an increase in volume.  Notice the high touched the lower trend line of our trend channel.  That looks like a kiss good bye to me.  The Dow actually got within 20 points of a new all time high today before the sell off into the close.  I believe the sell off was caused by people coming to the recognition the so called sequester is going to happen.  I have heard a lot of traders interviewed over the last week that believed there would be a last minute deal.  I think some people were buying expecting a pop on a deal.  In order to have a deal we would actually have to have people that want to make a deal.  This is clearly not the case.  Both parties only want to blame the other, but neither wants to change anything.  There will be no deal.  Now we just have to see how the market deals with that.  I don't think it is going to be very good, but we will see.

When I see a major trend change coming I get a little antsy.  I wonder on the little jiggles if the end is finally here.  I have a very difficult time trying to trade with the old trend because I know it is ending.  Major tops and bottoms vary in how long they take to form.  The problem is I know the change is coming a good 5-9 months in advance of the actual final high or low.  Each major turning point is just a little bit different.  Tops are always the hardest to recognize.  However, I am starting to realize that if I just wait and be patient it will become obvious.  This is now obvious.  While the majority think nothing bad can happen to the market because of QE, the market has actually made a textbook top.  I suspect most people will be afraid to short here expecting new all time highs first.  I think the odds are very high this bull market has just ended.  I have been expecting the next bear market to start without the Dow making a new all time high to have a non confirmation with the transports. I was getting real nervous on that today, LOL.  Stick a fork in it. May this bull market RIP. 


1 comment:

Anonymous said...

I couldnt agree more then I do .
401k people, transfer all your money in cash, and save ur gains if u had any.


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