Daily update 8/22

Funny how the NASDAQ exchange suddenly stopped trading when AAPL fell below 500.  Also kind of funny that Carl Icahn tweets about his dinner with AAPL CEO Tim Cook while the market was halted which caused AAPL to trade back above 500 after reopening.  I am sure that was just an odd coincidence, LOL.
The bulls showed up again.   Here is the daily SPX chart.

SPX touched the 50 SMA today, but failed to close above it.  The breadth was extremely strong at 82% positive.  The volume was extremely light. However, the NASDAQ outage of several hours might have affected the NYSE volume as well.  Here is a look at the SPY 60 minute chart.

The red resistance line is at the low of the bar marked by the yellow arrow.  Notice the bulls came in and supported the market for several bars there.  The bar marked with the blue arrow was a break down bar and the red line has been resistance ever since.  Today came in contact with the 50 SMA on this time frame also.  An hourly break out above that line could be an indication a true bounce is underway.  I don't know what the odds of that happening are.  This market has not closed up two days in a row since we started down from the all time high.  That in itself is probably an odd thing to happen.  It does show an urgency to sell into strength.  Has that urgency passed or will the bears be back tomorrow?  Here is a peak at the current breadth chart.

The McClellan oscillator has gotten above the -100 line so it is now in neutral territory.  The 10 DMA breadth lines are still very negatively cross.  The market has worked off the deep oversold breadth readings while trading sideways.  That could mean the market is consolidating to move lower.  A lot of the time it will get up closer to 0 or maybe cross positive before resuming the down move.  If tomorrow is up and SPX closes above the 50 SMA we might be on the way up to the 18 SMA area as a dead cat bounce.  The very slow response to my over sold buy signal indicates to me that bulls are very tentative.  I don't believe this is making a lasting low yet.  I suspect the number of people that believe the taper will start in Sept. is bigger then the number of people that don't believe that. 

Because breadth has returned to neutral if the bears strike again and close SPX below yesterday's low it could keep going down a few days.  Every up day has been met with some selling the next day.  I just don't see anything tonight that says there is high odds that will not be the case tomorrow.  I will be watching the SPX 50 DMA and the red line on the SPY chart in the morning.

Bob