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Monday, November 4, 2013

Daily update 11/4

Very light volume bounce day.  Here is the SPX daily chart.

The heavier selling that was present the last two days was very muted today.  SPX tested the high from 10/31, but was unable to close above it.  Did sellers just take a break or are they done?  I have no idea at this point.  SPX is still closing within the price bar of the key reversal day.  Lets zoom in to the SPY 60 minute chart.

SPY closed above the .618 retrace level of this little pullback over the last few days.  The red line marks the .786 retrace level.  A break out above that line should retest the key reversal day high.  The blue line is an uptrend line from the low on Friday.  Since the two lines are coming together one will break before too long.  The volume pattern over the last few days shows 3 big red bars and two big green ones.  This is still inconclusive at this time.  Lets look at the breadth chart.

Both breadth indicators had marginal positive crossovers today.  There is not enough strength here to say the market is taking off again.  We had 147 new highs today.  That was better then yesterday, but rather low given today was the second highest close for SPX ever.  This is not enough strength to proclaim the market is going higher either.

The last two days started with sizable gap ups and the futures ended the day not far from where they opened.  So yes the market rallied both days, but it did not do it in a very convincing fashion.  Dip buyers were present, but it is not so clear there are people willing to push prices significantly higher from here.  There certainly has been a lot of rapid rotation among sectors from day to day lately.  Various sectors can be up or down big one day and reverse it the next.  That suggests the news flow is confusing investors.  There seems to be some strong sector or index every day that helps to keep the market up while some other sector or index is holding it back.  I suspect that before this market goes anywhere we need to get a day where everything is in gear together either on the upside or the downside. 

Chart practice has been updated with HON the stock tonight.


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