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Wednesday, February 26, 2014

Daily update 2/26

Another day another failure.  Here is the daily SPX chart.

In the last three days SPX has climbed above 1850 on seven different occasions, but could not stay there.  That is pretty stiff resistance I would say.  I wonder how many more tries it will take to get a decision.  Small caps were strong today.  I believe that was caused by an article in the USA Today money section talking about how well small cap stocks have done on this rebound.  I think that buoyed the entire market.  Will that kind of support be there again tomorrow?  Lets zoom in to the SPY 60 minute chart.

SPY dipped below its 50 SMA a couple of times today, but failed to stay there.  That MA is moving up into a position where it will be harder to stay above it and not break out.  That should help to force the market to make a decision here soon.  The volume pattern remains bullish with mostly big green bars, but the market has not made any upside progress.  Notice the pattern of afternoon selling the last four days in a row.  Every day we ended below the 18 SMA only to bounce again the next morning.  The afternoon crowd is supposed to be smarter money then the morning crowd.  They seem to be smart enough to stop selling before the market breaks down.  How many hits to the head in the afternoon will the morning dip buyers take and keep showing up?  How much more stock do the afternoon sellers want to sell?  I don't have the answer to either question, but those are the questions that will determine whether we go up or down from here. 

I would think that some day we will either close above SPX 1850 or below the SPY hourly 50 SMA.
Until one of those two things happen the moves are just market noise.


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