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Tuesday, July 2, 2013

Daily update 7/2

Another day, another failure by the bulls.  Here is the SPX daily chart.

SPX has been above the 18 and 50 SMAs both of the last two days, but failed to close there.  How many more attempts are the bulls going to get?  With a double failure so far a break of today's low is likely to usher in more selling.  Here is a look at the SSO 60 minute chart.

Again SSO was above the red resistance line intraday, but could not manage to stay there.  We have clear resistance in the 6/20 big gap down.  Do the bulls have enough ammo to break through it?  At this point it is likely to take a really big gap up and over it to do it.  Lets have a look at the current breadth chart.

The McClellan oscillator is turning down from over bought and the 10 DMA breadth lines crossed back negative today.  That suggests breadth on this rally may have peeked and the bulls are running out of time. 

Tomorrow is a half day for the July 4th holiday.  Will it be a light volume up day, or will the bears pounce after the double failure at the 50 SMA?  A down day will likely set in motion a retest of the 6/20 low.  The market has worked off the oversold condition without showing enough strength to be able to say it is starting a new leg up.  The market rallies on the opening during amateur hour, but it consistently sets the high of the day before 1:00 and sells off.  That is pretty much the opposite of what bulls want to see. 


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