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Thursday, June 20, 2013

Daily update 6/20

Wow.  I did not exactly expect that all in one day.  SPX did not quite get down to the 1576 support level, stopping at 1584.  This was a 90/90 down day.  That means 90% of stocks were down and 90% of the volume was in down stocks.  That is the first one of those we have had in a long time.  The volume was also very high today.  The only odd thing was the TRIN was only .90, not showing a lot of panic.  Usually these are short term selling capitulation days.  The market commonly will bounce for 2-7 days afterwards.  That could take us through the quarter end mark up period. This market has been meticulous in filling gap downs.  If we do get the bounce we are likely to fill that gap down from this morning at a minimum.  Here is the daily SPX chart.

SPX broke the 6/6 low.  It has a blue bar indicating it is below the lower Bollinger band.  This sets up a potential double bottom.  A move back above 1600 could spark a rally.  I still did not get my good oversold buy signal.  However, the VIX closed above 20 so that may spark some buying interest. 

This was a red day all around the planet in all asset classes.  It was clearly a move to cash.  Is that a short term move or something longer lasting?  The lack of panic today could mean it is longer lasting.  If we get a bounce attempt I am not sure how far it will carry.  Will it kiss the blue channel good bye,  fill the gap down, or test the May high?  Some kind of bounce seems likely unless we have gone far enough to cause margin calls.  If we get another 90/90 down day it should be considered a warning sign of further market weakness


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