I have mentioned the last swing low of 1639 a few times lately. We traded above it for the last three days, but closed back below it. Today we had a big gap up that faded, but we ended the day fractionally above that low. We are still fractionally below the 100 SMA though. This is the key area for bulls to surmount. Here is a look at the SPY 60 minute chart.
SPY gapped above the 50 SMA this morning, but failed to hold it. It dropped below the 18 SMA during the afternoon, but failed to break down. The late day rally into the close has SPY back above the 18 SMA.
That is the first time that has happened since the 8/27 big gap down. Since 8/28 the biggest volume bars are green. This looks like the market wants to bounce to me. There is one other interesting thing. Check out the current breadth chart.
The McClellan oscillator is still negative, but the 10 DMA breadth lines crossed positive today. That is a plus for bulls.
If the market starts up in the morning I think it is likely to continue this time. We have not made a new low for several days and it seems likely some shorts will start to cover. What happens after that gets pretty complicated. We have two big gaps up above that might be filled. However, we could get up to the 50 SMA and roll over again. A common pattern the develops after a high is a lower double top. That could form if SPX bounces up to the last swing high around 1669 and rolls over. Given the weak market internals at the high I still think a trip to the 200 SMA is in the cards. My best guess is that any rally that develops here will roll over before we make new highs. If SPX takes out the 1627 low instead of bouncing then a mini crash down to the 200 SMA is likely.
Chart practice has been updated with ACN the stock tonight.
http://traderbob58-chart-practice.blogspot.com/
Bob
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