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Monday, July 29, 2013

Daily update 7/29

Hmm.  New highs were only 93 today.  Dropping under 100 this close to the highs is probably not good.  Are bulls losing their mojo?  Here is the daily SPX chart.

Today is the first red bar since turning green back in June.  SPY rallied intraday to test its hourly 50 from below, but failed and closed below it.  The last two days we closed with SPY above that MA.  However, no rally chasers showed up to push price higher.  SPX is still above the reversal day low (1682).  A close below that level could kick off some more selling.  Check out the current breadth chart.

Both the McClellan oscillator and the 10 DMA breadth lines had a negative crossover today.  That is a little surprising this close to the highs.  Combine that with the new highs under 100 and I would think the odds of a pullback are rising.  Here is the stocks versus their MAs chart.

The number of stocks above their 10 (yellow line) and 20 (orange line) MAs have dropped dramatically.  The green lines on those sections of the chart mark oversold levels that often make bottoms during strong rallies.  Neither is quite their yet.  Also notice the stocks above their 50 MA (blue line) appears to be rolling over.  If we end up with a pullback this will be the first time in this bull market that SPX made new highs without that blue line getting above the green horizontal line after hitting the red line in a sell off.  In fact, every other time the red line was hit the green line was hit before price made new highs.  This looks like a sign of internal weakness which is also seen in the new high/low data.

At the moment the internals are weaker then at any other time SPX was at new bull market highs.  These divergences will clear up if price keeps rising.  However, if it does not then this time is different.  Pay close attention.  The latest reversal day low of 1682 is key here.  A close below that could kick off some selling.

Chart practice has been updated with FDO the stock tonight.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.