Daily update 9/4

Can you believe that.  I actually got a bullish call right.  Last night I wrote "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."  Here is the daily SPX chart.

SPX ended the day a bit below the 18 SMA.  That was really a very slow developing bounce which indicates the bulls are not exactly in a strong buying mood.  I suspect a lot of the buying today was short covering because we did not break down.  The 18 SMA has now crossed below the 50.  The last time that happened the market had already bottomed and was on the way to new highs.  The bulls clearly do not have the same vigor this time.  Here is a look at the SPY 60 minute chart.

SPY filled the 8/27 big gap down.  It also found resistance there the rest of the day.  How significant is that resistance?  Unfortunately I have no idea.  That makes it kind of hard to predict what happens tomorrow.  Will it pull back from resistance to test the 50 SMA from above or will it just consolidate near here and eventually power through?

SPX has now been up two days in a row.  That is the longest up streak the market has made since the all time high back in Aug.  Will it be different this time?  Are bulls now ready to push price when they have been reluctant before?  I don't really see any edge to predict tomorrow.  Another up day should help give bulls some confidence.  A down day that holds above the hourly 50 SMA would not necessarily stop the rally attempt.  The ADP employment report comes out tomorrow.  It does not really correlate very well with the non-farm payroll data out Friday.  However, a lot of people may try to use that data to infer what Friday might bring.  That employment report may be a key piece of information relating to the FED tapering.  A really strong ADP report might be bearish while a very weak report likely bullish.  In between is a who knows deal.  Friday might give us a radically different number and result.  Don't forget the Syria mess.  The market dipped when it was reported that the Senate panel sent a resolution to the floor to be voted on next week.  The market usually does not like war drums.  There is usually a sell off until the bombs start flying.  Needless to say there are some possible news events that could whip the market around.  Be careful.

Bob