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Tuesday, March 12, 2013

Daily update 3/12

SPX closed down on the day for the first time this month.  That is not a misprint.  It actually happened.  Here is the daily SPX chart.

SPX is still above the upper red expanding volatility pattern trend line.  Will the bulls show up tomorrow to keep the rally going?  Volume increased over yesterday, but nothing too dramatic.  Lets take a look at the SPY 195 minute chart.

SPY bounced off the slanted green support line that marks the lows of the move up from the last swing low in Feb.  The volume on the first bar today indicates some distribution for the first time this month. Will that continue or is it a fluke?

Both the daily SPX and the 195 minute SPY charts show support lines the market held today.  Who will show up tomorrow?  We did not do enough damage this morning to shift the odds to the bears.  Nor did the bounce this afternoon have enough strength to say the bulls will come back in force tomorrow.  Breaking today's low would be a sign that we might be initiating a pullback.  I hate to keep harping on this, but keep in mind the long trade is extremely crowded.  The market has come a long way and there could be a rush to the exits at any time to lock in profits.  Those wide range down days often happen when you least expect it.


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