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Wednesday, May 1, 2013

Daily update 5/1

The sell in May crowd won today despite it being a FED meeting day.  The futures were up early this morning until the ADP employment report missed expectations.  Selling persisted all day.  Was the miss just an excuse to sell since it was May?  They have been buying bad economic data for the last two months as if it was a good thing.  Lets look at the daily SPX chart.

SPX has not been anywhere near the top of the price channel in a long time.  It has managed to stay in the channel, but that is about as much as you can say.  Will that continue now that May is here?  At the moment that looks like a potential double top with the mid April high.  If we fall below the lower channel line again I think the selling will pick up this time.  Lets zoom in to the SSO 195 minute chart.

SSO broke out the bottom of the rising wedge pattern first thing this morning.  It followed through in the afternoon on a good bit of volume.  The red line is key for bulls.  It must stay above that.  Lets look at the 60 minute chart.

SSO closed below the 50 SMA with blue bars.  That means it is below the lower Bollinger band on this time frame and is extended in price.  The dip buyers should show up tomorrow morning overnight news permitting.    

Both the transports and the Russell 2000 were down more then 2% today.  That smells like risk off. Everybody knows what has happened the last three years in May.  If the bulls do not seize the moment it will become a self fulfilling prophecy again this year.  I don't think they will have much time before people start to unload.  The ball is in their court.  Lets see what they do with it.  A failure to show up tomorrow at all would increase the odds quite a bit we have some kind of top in place.

Chart practice has been updated with JCP the stock tonight.


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