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Wednesday, January 29, 2014

Daily update 1/29

Bent, but not broken.  Here is the daily SPX chart.


SPX closed fractionally below the key 1775 support level.  However, it closed a bit above the 1/27 low.  SPX tested that low a bunch of times today, but could not break it.  Volume was heavy.  There was a lot of trading that took place after the FED announcement that was exactly as everybody expected, LOL.  However, the net movement was rather muted.  Apparently there were a lot of both buyers and sellers.  Lets zoom in to the SPY 60 minute chart.


Plenty of volume in SPY today.  There is a potential double bottom.  Despite the heavy volume and extreme negative breadth readings all day the futures ended the day just 2.5 points below the open.  The bears tried, but failed to break the bull's will.  As over sold as we are in the short term it should not take too much to get a bounce going now.  If we break down here instead it is likely to cascade down.  Breaking the 18 SMA on the upside should be a good indication the bounce scenario is on.

We are over sold on support the ball is in the bull's court.  Should they show up and get a bounce going it could be fast and furious for a couple of hours as the shorts get squeezed.  My expectation is that a bounce is likely to run into stiff resistance around SPX's 50 DMA.  Jan. has not been kind to the bulls.  I have a feeling they may try to make it look less bad in the remaining two trading days.

Bob

 

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