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Friday, May 31, 2013

Daily update 5/31

Last night I wrote "SPX managed to hang onto its 18 SMA again today.  However, it is now getting time to launch or break."  I guess I was right.  It broke today.  Here is the daily SPX chart.

SPX closed right dead on its low.  There were over 152 new lows today so this was a second day over 100.  This pullback is different then any other pullback this year.  Do not expect it to end as fast.  The people that have been buying all those gap downs just got bitch slapped up side the head.  They will likely be a bit more cautious now.  Lets zoom in to the 195 minute SSO chart.

We now have the trend bias as down confirmed by the lower close.  The daily chart is still up.  Since we closed right on the lows the selling was probably not exhausted.  A gap up on Monday is likely to be sold into for a retest of today's low.  A gap down is a little hard to say.  The 195 minute chart has a blue bar indicating it closed below its lower Bollinger band and is extended.  We could get some shorts taking profits on a gap down that could cause a bounce.  However, the U.S. and Japan have been holding up equities around the world.  Japan has already broke and now the U.S. is showing cracks.  Today's sell off could echo around the world on Monday and cause a gap down that people sell into anyway.  Whether we bounce on Monday or not, the 50 DMA is still likely to be hit before any significant bounce.

Here is the monthly SPX chart.

SPX closed with a blue bar indicating price was above the upper Bollinger band and is extended.  So we have trend line resistance and the Bollinger band to contend with.

Chart practice has been updated with LMT the stock tonight.

Have a great weekend,

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