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Tuesday, August 20, 2013

Daily update 8/20

Inside day on the QQQs and SPX.  The Russell2000 and the transports traded above yesterday's high.  This leaves us in undecided territory on whether to bounce or not.  Here is the daily SPX chart.

SPX closed back inside the lower Bollinger band today.  However, it found resistance at yesterday's high and ended up closing below the 50 SMA again.   On Friday we closed below the 50 SMA and Monday we closed below Friday's low.  That technically is a break of the 50.  Today it traded slightly above the MA, but was turned back.  Breadth was strong at 74% positive and yet SPX was unable to stay above the 50.  Lets look at the SPY 60 minute chart.

SPY got above the 18 SMA for the first time since the big gap down.  However, once there it never had a bar close above the high of the bar that closed above the MA.  Therefore it never technically broke it to the upside.  There was a big green volume bar this morning as the market rallied early.  The bulls are trying to make a stand.  I don't know whether they are going to be successful or not.  A break of yesterday's low or today's high could signal the direction of the next move.

The fact that it took three days after my oversold buy signal before we got a positive day means the market is inherently weaker then it has been over the last year.  All other buy signals in that time frame have rallied the next day.  Since we technically broke the 50 SMA caution is advised until we get a close back above it.
Even though we are over sold the bulls do not seem to be very vigorous.   Will they show up and try again tomorrow or will they fold? 


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