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Wednesday, May 29, 2013

Daily update 5/29

Gap downs are coming a lot these days.  However, dip buyers keep showing up just as often.  Here is the daily SPX chart.

SPX is still above its 18 SMA.  Will it bounce or break?  Lets zoom in to the SSO 195 minute chart.

The trend bias on this time frame flipped to down today.  However, it needs a lower close for some confirmation.  Lets take a look at the current breadth chart.

Both the 10 DMA breadth chart and the McClellan oscillator have the most negative readings they have had since last Nov.  Breadth was 78% negative, but oddly the trin was an extremely low .48.  On 5/22 the breadth was 76% negative and the trin was .93.  Readings under 1 like that show there was no panic selling.
Therein lies the problem.  Every other day this year that breadth was 70% negative or worse the trin was 1.5 or above.  This is a bit of a change in character in the market.  Up until now there was some panic selling when the market pulled back.  So far that is absent at this time.  Obviously panic will happen if we keep going down.  One more chart is the new highs/lows.

We had 124 new lows today.  I marked the two times last year that new lows shot above 100.  As you can see SPX was well off the highs before it happened.  This is only one day off a new bull market closing high in the Dow.  That is the first time that has happened this entire bull market.  Another sign of internal weakness?
Despite dip buyers showing up on the gap downs, the market appears to be continually getting weaker. 

I had to laugh when I saw today's USA Today paper.  I have commented on some articles in the paper that were in the money section.  However, today the front page says "Bull run gets solid footing".  Well, internally the bull run has the weakest footing it has had all year.  I guess we will see what happens.

Chart practice has been updated with AAPL the stock tonight.  I am sure followers of the stock have noticed the possible inverted head and shoulders bottom pattern.  Just in case you haven't check it out.


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