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Friday, March 8, 2013

Daily update 4/8

The market has gapped up four days in a row, will it make it five?  Here is the daily SPX chart.

There are a lot of hanging man candles on all the index ETFs.  That could be a warning sign, but we will need to see downside follow through.  SPX closed above the upper trend line and back above the upper Bollinger band again.  In SPX broadening pattern I showed two examples of a similar pattern.  Both closed above the upper trend line.  One kept going higher and the other tanked.  Clearly the first step in possibly tanking would be to close back below that upper trend line.  If it does not do that in the next few days it could just keep going up.  Lets zoom in to the SPY 195 minute chart.

I predicted last night that they would likely sell a gap up on the employment report.  That is finally a prediction that came true.  It seems like it has been a while since the happened, LOL.  We still have not tested this latest move up with any serious selling.  Most Monday's have been down this year, maybe we can get another one.  The volume picked up quite a bit today. 

I think this is an article that should worry bulls.  Dow 36,000 Is Attainable Again
You might recall how the book titled "Dow 36,000" came out shortly before the 2000 top.  There is also a lot of  secular bull market talk I am seeing in the media.  I saw an article today showing the obvious potential triple top on SPX since 2000 and showed a chart of mutual fund outflows as evidence it was going to be different this time and it is going to continue up.  That really cracked me up.  It is not bullish when people pull money out of the market on a regular basis.  That is exactly what happened during the last secular bear market.  It is bullish when people put money in on a regular basis like the 82-2000 period.  The sudden flood like we had the last two months is not good.  Major tops do not get any easier then this to identify.  March is a common month for tops and bottoms.  I should have known it would not happen in Feb.  It never does.  I know so many things that I sometimes have trouble remembering it all, LOL.  It very well could happen this month.  SPX topped in March 2000.  There was a retest to a lower high in late Aug. before the big crash though.  The following bear market hit its final low in October of 2002, but had a retest to a slightly higher low in March of 2003.  The real move up started from that March low.  This bull market kicked off in March of 2009.  The only major turning point since 2000 that did not do something important in March was 2007.  That particular top formed between July and Oct. that year. 

The market ship is so loaded on the long side that there is no way it does not capsize at some point.  The trick is to figure that point out before everybody else does.

Chart practice has been updated with GS the stock today.


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