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Thursday, January 9, 2014

Daily update 1/9

Are we getting somewhere?  Today was an outside day.   That can mean the emotions are picking up and a directional move may come soon.   Here is the daily SPX chart.

This is day five of 1838 holding as resistance.  SPX ended the day right there.  I have commented numerous times in this blog about the market gapping up and over resistance when it can't get through it during the day.  I can't even remember the last time the trick did not work.  Sellers emerged on the open and took price below yesterday's low before the bulls stepped in.  This leaves us with something we can work with.  Closing outside today's range 1830-1843 should kick off the next short term trend.  Check out the SPY 60 minute chart.

I have added another trend line across the recent lows.  SPY broke the older lower trend line and rallied back to it late in the day.  It then turned down just a bit into the close.  Notice the big red volume bar from this morning.  It is odd in that the highest volume of the morning usually occurs in the first hour.  That red bar was the second hour when SPY was probing below yesterday's low.  I want to show you the 130 and 195 minutes charts also tonight.

When looking at volume it can be helpful to look at multiple time frames.  The picture can change.  I commented on how the 60 minute chart has been clearly big green bar dominant which is bullish.  However, since the beginning of Nov. the 130 and 195 minute charts are different.  There are quite a few big red volume bars in both charts.  Even after the last FED meeting and break out to new highs there were still big red bars.  Both of these charts look a bit like distribution to me.  At the very least they are not wildly bullish at the moment.  Lets take a look at the TLT chart.

I redrew the upper trend line based on the recent peaks (tnx Herm for showing your chart).  TLT is at the upper line again.  Will it break out or be turned back? 

This morning we gapped up and over resistance and above the neck line of an inverse head and shoulders pattern that had developed over several days.  That should have been a bullish development, but only the sellers showed up to the party.  Remember back in Nov. when the market was struggling with 1808.  I said that the intraday action looked like it was a lack of desire to push price more then selling resistance.  This pattern looks more like selling resistance to me.  The difference matters if resistance is not overcome and sellers swamp the dip buyers.  We did not have that problem to worry about late last year.  If the market turns down here it could result in a bigger pullback then we have been seeing over the last few months.


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