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Wednesday, December 4, 2013

Daily update 12/4

Another mixed day.  SPX is down four days in a row now.  Here is the daily SPX chart.

SPX closed just barely above the 18 SMA.  There were two sizable intra day bounces today.  The first one this morning took SPX up to 1799.8 just below the key 1800 level.  That rally was sold into hard and we ended up at new lows.  The afternoon rally was sold into late in the day.  There was quite a bit of volume today.  The participation rate is increasing.  Lets zoom in to the SPY 60 minute chart.

There was a lot of volume on the bounce this morning.  SPY tested the 18 SMA twice and stopped dead in its tracks.  That can be a sign that a strong move is starting.  We seem to have two pretty clear trend lines now.  It looks like a slight broadening pattern is forming.

The dip buyers were out today, but did not quite win the day.  Will they get over run by rally sellers?
We established 1800 as resistance today.  The bulls need to conquer that level before getting full control back.  Both volume and volatility are picking up. Maybe this is not going to be a sleepy Dec. this time.  Normally that combination favors the bears.  European markets were hit pretty hard the last two days.  Much more so then the U.S.  Emerging markets have been lagging for a long time already.  This could be the start of a global move down in stocks.  If that turns out to be the case it could increase the selling pressure considerably.  The key level to watch on the down side is still 1775.  This does not appear to be a good time to be long and fall asleep.  The market has a very weak technical condition combined with extreme bullish sentiment.  That combination can provide a 7-10% pullback pretty easily. 

When the market started up strongly in Sept. I commented that it may be discounting no taper from the FED at the Sept. meeting.  That turned out to be the case.  It is possible the economic data of late has raised fears of a taper coming soon.  That could be one reason behind the selling.   

Chart practice has been updated with DE the stock tonight.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.