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Monday, May 6, 2013

Daily update 5/6

That was a snooze fest.  Here is the daily SPX chart.

Despite closing higher SPX is back inside the upper Bollinger band tonight.  SPX has not hit the upper channel line of my old price channel in a long time.  The last pullback went below the channel bottom quite a bit as well.  I have changed the old lines to gray and added a couple of new lines.  I think a new channel may be forming here.  There is a little more room up to the upper line, but price is pretty extended from its 18 SMA.  Lets zoom in to the 30 min. SSO chart.

I marked the highs and lows of the 30 min. bar indicated by the blue arrow.  That was the second bar after the latest big gap up.  Notice how price has stayed inside that bar ever since.  It has tested both the low and the high, but failed to get outside that range.  Inside those lines it will be pretty choppy.  The next big move will come when we get outside the lines and stay there.  Since that bar the market has acted just like it did at 1595.  There are dip buyers, but rally chasers are lacking.  When price gets up to old highs buyers get shy.  Not that I blame them, LOL.  I commented a few days back it would take brave souls to push prices higher.  We may do like before and hang around a few days and then gap higher to clear this level. 

I have seen some references to Friday's gap as a break away gap.  I am not sure what it would be breaking away from, LOL.  Price is in an uptrend.  However, it lacked volume and a true break away gap would likely have people piling in and we would have made new highs in the afternoon.  It probably has higher odds of being an exhaustion gap then a break away gap.  Time will tell on that. 

There was one oddity.  Check out the Nova/Ursa ratio chart from yesterday.

The ratio actually turned down slightly despite the big gap up.  It would appear more traders sold the rally then bought it.  I don't have enough experience with this chart to know if that is significant or not.  I would say it indicates a hesitation on the part of traders to chase the market higher from here. 

I have no idea what happens tomorrow.  I will be watching my lines on the 30 min. chart for a break of the current narrow range.

Chart practice has been updated with EA the stock tonight.


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