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Wednesday, July 31, 2013

Daily update 7/31

Interesting day.  The futures climbed above 1688 multiple times today, but could not stay there.  We have clear resistance in this area.  Here is the daily SPX chart.

SPX tested into the highs from 7/23 and 7/24, but was rejected rather soundly.  This has created a possible short term double top within the context of the bigger possible double top with the May high.  I call this the double double pattern and is my favorite reversal pattern.  It works just as well for bottoms.  It is powerful because it involves both short term traders and longer term players.  Here is a look at the double double top pattern from 2011.

The circled area is the short term double top that was slightly below the high marked by the red arrow that made the bigger picture double top.  We currently have a slightly higher high, but it is easily in realm of the bigger double top.  The key level for the current short term pattern is the middle low at 1676.  A break of that should confirm the short term double top and could lead to an increase in selling pressure. 

I found the SPY 60 minute chart interesting today.

SPY tried to break out over the upper trend line twice today, but never succeeded.  It ended the day down near the lower trend line.  Will it bounce again off that line?  There was quite a bit of volume on that last bar that sold off hard into the close.  We had worked off the daily over bought condition enough to support more upside.  The FED results were status quo as in more QE for now.  Why did the market sell off so hard?  

Check out the chart of TLT.

TLT retested the 7/5 low this morning and rebounded strongly.  This looks like a pretty good attempt at a short term double bottom.  If that turns out to be true there could be some portfolio rebalancing going on.  With bonds down big and stocks up this year the portfolio percentages for a lot of people are probably out of balance.  There could be some rotation out of stocks into bonds.

Chart practice has been updated with WDC 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.