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Friday, August 23, 2013

Daily update 8/23

Wow, finally.  Steve Balmer is retiring as CEO of MSFT.  What a great day for Windows users all over the world.  We finally have hope that maybe, just maybe they will find somebody good to run the company.  I spent about 10 minutes with Balmer in the 80s while I was at IBM.  He was demonstrating that new fangled excel program.  I left the conversation thinking he was an idiot.  Imagine my shock as he rose through the ranks at MSFT and became CEO.  I told my wife there goes the company.  Gee, I guess I was right on that one, LOL.  Here is the daily SPX chart.

SPX closed above the 50 SMA.  Are we on the way to the 18 SMA?   I updated the chart with green arrows for the last two buy signals.  As you can see the reaction was totally different this time.  The buy signal has a technical exit which fired today.  The buy signal triggered with SPX closing at 1661 and the exit signal fired with SPX closing at 1663.  With the exception of the 2011 crash this is the worst performance of the signal in this entire bull market.  We are still well below the high of the signal day which is rare.  The bulls are very tentative here.  Here is the SPY 60 minute chart.

The bears defended the red line on the SPY chart this morning as it gapped over it, but traded back below.  However, buyers stepped in and SPY managed to close above it on an hourly basis.  The market just trudged higher the rest of the day.  I put in another resistance line at the high of the big gap down bar.  The low of that bar was resistance that held the market in check for days I suspect the top of that bar will be even stronger.  Here is the current breadth chart.

The 10 DMA breadth lines are still negatively crossed.  The McClellan oscillator made it up to near zero today.  With my buy signal exit triggered and breadth in neutral condition I will not hesitate to short if this market turns back down again.  The current upside target is the SPX 18 DMA.  If we close below a prior day's low before we get there it may be a roll over. 

I have talked about how this market high was the weakest internally in this entire bull market.  The poor performance of this oversold buy signal is another sign of market weakness.  This is only the second time the market did not rally the next day after a signal in this bull market.  The other time was the 2011 crash.  My gut feeling is that the bull market is over and we are now starting the bear.  We will have to get much lower to confirm that of course.  I am absolutely positive we are in the most serious correction we have seen since 2011. 

Chart practice has been updated with FFIV the stock tonight.

Have a great weekend,

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