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Thursday, June 27, 2013

Daily update 6/27

Another big gap up, but still no sign shorts are scared.  Here is the daily SPX chart.

The 18 and 50 SMAs were in the same area today and they stopped the rally cold.  Another day of falling volume.  This chart looks like a textbook dead cat bounce.  Check out the daily SPY chart.

SPY has three doji bars in a row.  Today's bar came right at the down trend line.  Earlier this month we got above that down trend line, but turned right back down.  I think it may still be valid, but I am not real sure.  This is probably the strangest bounce I have ever seen off my over sold buy signal.  Today's bar is a gravestone doji which is somewhat bearish, but it needs downside follow through. 

Here is the current breadth chart.

The 10 DMA lines came together today while the McClellan oscillator has a slight positive cross.  This three day bounce has completely worked off the over sold condition.  The power is up for grabs here.  Another up day would greatly strengthen the bull case.  However, a downside reversal could easily tip the scales back in favor of the bears.

The futures got into the price gap of the big 6/20 gap down today.  However, they found resistance and could push no further.  Will they gap it up yet again?  If they do it might finally get the shorts to cover.  With the trend indicator down and breadth in a neutral condition a move down from here is likely to carry down to the April low. 


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