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Monday, April 15, 2013

Daily update 4/15

Wow.  Spectacular break out failure.  Early in the day SPX tested the 2007 intraday high of 1576 from above, but eventually failed.  That kicked off selling the rest of the day.  The 2007 closing high of 1565 also gave way.  SPX was trying to find support around 1561,  but when news reports of explosions in Boston come out that caved in also.  Here is the daily SPX chart.

Everything about the last few weeks on this chart looks like a top.  We had alternating up and down days with down days getting the biggest volume indicating distribution.  Then we had a consolidation break out to new highs to flush out weak shorts and suck in weak longs.  Then the break out failed on big volume.  A lot of volume came in after the explosion reports.  Does that mean we need an asterisk by today's bar?  Can we take it at face value?  At face value this looks like a serious top.  I guess we will see what happens.  The breadth was the most negative (85% decliners) all year and it was that way before the news event.  That fact would seem to help validate this is a top.  The volume might not have been this big without the news though. Lets look at the SSO 195 minute chart.

We crossed below the red line this morning and kept on going.  SPY has a lot more volume relative to the other bars on its chart then SSO has. 

SPX stopped right on the trend line that has been marking the lows of the rally off the Nov. low.  The bias indicators on both the daily chart and the 195 minute chart are still up.  Will the dip buyers show up tomorrow?  The next couple of days are key for the bulls.  Failing the break out to new all time highs is a very big event.  If the bulls cannot recapture that break out level this market could fall pretty hard.


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