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Wednesday, June 19, 2013

Daily update 6/19

Thud.  The FED meeting was really market moving.  TLT, SPX, and GLD went down while the dollar index went up.  The breadth was 82% negative and the TRIN was 2.14.  There was a bit of panic selling today.  Will it continue or reverse tomorrow?  Here is the daily SPX chart.

SPX turned back from the .618 retrace level on volume.  It is back below the 18 SMA and the trend indicator turned back down after one up day.  This is the second time SPX turned the trend up but did not follow through on the upside.  Tomorrow is going to be an important day.  Yesterday's high is a crucial level for the bulls to conquer to regain control of the market.   If we close lower I think we are on the way to the 200 SMA.  We bounced off the 50 SMA twice so if we get there again it should break down.  The last couple of weeks look like a textbook bear flag.  It relieved over sold pressure, but never showed any true internal strength.  Below the 1597-1600 support level this rally attempt started from is 1576.  That is the intraday high from the 2007 top.  If that fails then the break out to new all time highs is at risk of being a failure.  Failed break outs are not good.  I will have more to say about what it might mean if it happens.

Sometimes the reaction to a FED day is reversed the next day.  I don't think that is going to happen this time.  However, we did have high TRIN at the close so a bounce tomorrow morning is not out of the question.  I am not sure it would last all day though.  The last few weeks they have been buying gap downs consistently.  Will they still do that?  This market has changed directions quite a few times over the last few weeks.  That makes it a bit hard to predict what happens tomorrow.  Today may have been a tipping point to the down side, but we need to see follow through.


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