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Tuesday, December 3, 2013

Daily update 12/3

Down side follow through.  How odd is that?  Here is the daily SPX chart.

SPX closed below 1800, but a bit above the 18 SMA.  It has a red bar tonight.  The last time that happened the bulls came out in force the next day.  Volume picked up quite a bit today.  It was the heaviest volume since 11/15.  Lets zoom in to the SPY 60 minute chart.

SPY has a confirmed break of the 50 SMA.  That has not meant a lot the last few weeks.  Will it be different this time?  SPY bounced going into the close as the dip buyers stepped in again.  That could continue in the morning.  The 18 and 50 SMAs lie in the 180.60 area which could be resistance if tested.  Lets look at the new high/low chart.

There were more new lows (84) then new highs (49) today.  I marked the chart with red arrows on the other pullbacks the first day lows outnumbered highs.  As you can see the last pullback was different then the prior two.  The new lows did not spike up until the last two days of the sell off.  The prior two peaks saw the lows pick up only a few days off the high.  That is the condition we have now.  I would think that increases the odds we are in pullback mode again.

SPX closed below the recent 1800 support level.  Will the bulls come racing in to buy the dip or will the bears get control of the market this time?  With the drop in new highs and surge in new lows I think caution is warranted unless SPX can close above 1800 again.  On the down side I think 1775 is still the key level to watch.


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