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Tuesday, January 14, 2014

Daily update 1/14

About face (again).  Would you looky there.  SPX closed at 1838.  There goes that totally random market stopping right at a key level again.  Just amazing isn't it, LOL.   Here is the daily SPX chart.

SPX closed back above the 18 SMA, but right at the key 1838 resistance level.  You might notice how similar the recent price bars look to the circled area from Nov.  Will we shoot up to new highs like we did then?  Who knows.  If it was that easy they never would have invented the saying about past performance not necessarily being indicative of future results.  There is a difference this time.  We had a bit of an over sold condition back in Nov.  Check out the stocks vs their MAs chart.

Back at the Nov. 7 key reversal down day the 10 and 20 DMA sections of the chart were around their green over sold lines.  We don't have that today.  Lets also take a look at the current breadth chart.

Back in Nov. the McClellan oscillator was down at the over sold -100 line.  This time it was only down around the neutral zero line.  Lets take a peak at the SPY 60 minute chart.

SPY ended the day right in the area of resistance that has been in place all year.  The volume pattern is showing some big red bars now indicating some distribution.  That is starting to match what we have been seeing in the 130 and 195 minute charts.  Here is the SPY 60 minute chart from Nov. for comparison.

As you can see the rally on Nov. 8 had much higher SPY volume then the sell off on Nov. 7.  That is not the same picture we have today is it.

Where does all that leave us.  We have a similar looking daily chart to Nov. that led to new highs.  However, we do not have the same oversold type condition that might entice buyers to push price.  The SPY volume pattern is not really bullish either.  Will the bulls show up and push price through resistance tomorrow?  It seems a bit doubtful given the technical evidence at hand.  I guess we will see.

The daily SPX chart is clearly showing two distribution bars this year and no accumulation bars.  The SPY 130 and 195 minute charts suggest there has been distribution since early Nov.  It seems like there might be significant down side risk if this market rolls over here.  Be aware.


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