Daily update 7/16

How odd is that.  A down day!  I heard them say on TV today that Bernanke will be issuing prepared remarks at 8:30 AM tomorrow before his congressional testimony.  They used to do that at 10:00.  I have no idea if the comments will be market moving or not.  Here is the daily SPX chart.

SPX closed below yesterday's low, but still above the 6 SMA.   This is the first time this entire rally that SPX closed more then just fractionally below the prior day's low.  I don't know how people will react to that.  Will the dip buyers rush in or will there be some profit taking?  Lets look at the SPY 60 minute chart.

SPY has a confirmed break of the 18 SMA.  It is still well above the 50.  There is a rather big gap from 7/11 it might want to fill.  At the moment that would be a little below the 50 SMA.

Are we starting a pullback or will the bulls show up again right away?  SPX is still very extended so it is easy to see there could be further to go on the downside.  It all depends on how ambitious the bulls are.  Price could work off that over bought condition in a sideways manner.  All this may or may not depend on what Bernanke says or what earnings come out.  It is just too hard to predict at the moment.

What happens if we get some downside follow through tomorrow?  The 18 SMA would be a normal target for a pullback, but it is nearly 50 points below.  It is also below the 50 SMA still.  It seems unlikely to get that far.  At the same time price is so extended it may overshoot the SPY hourly 50 SMA.  If the market continues down I will work on some possible support levels for the next update.

Bob