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Tuesday, January 21, 2014

Daily update 1/21

Another outside day.  This is the second outside day and last week was an outside week.  This type of price bar is pretty rare.  This market is definitely having a hard time deciding what to do.  Here is the daily SPX chart.

The 18 SMA has now risen up to 1838.  A launch off that MA or a break below it should happen fairly soon now.  Today's gap up open was very strong with 78% of stocks up in the beginning.  However, sellers took control fairly quickly and sent price below Friday's low.  The dip buyers are doing their part, but the rally chasers are being overrun by rally sellers.  Until one side gives up we will be stuck in this range.  The volume has been above the 50 day average for the last two weeks.  It is not a lack of participation that is keeping the market range bound.  There is clearly a sizable group of people selling strength and a sizable group of people buying the dip.  The question of course is which group is the smartest.  The strong open failing to break out indicates the resistance at the 1850 level is still strong.  Until we break out above 1850 or down below 1820 expect price action to be sloppy. 


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