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Thursday, February 27, 2014

Daily update 2/27

SPX closes at a new all time high.  It is now about  6 points above the Dec. 31 close.  Wow, quite the rally over the last two months.  Here is the daily chart.


Volume was lower today then yesterday.  There were only 134 new highs.  That is an embarrassing performance for bulls.  Price is still extended from the 18 SMA.  That means we still have a short term overbought condition.  I wonder how that is going to work out.  Lets take a look at the SPY 60 minute chart.


Volume has been dwindling the last two days.  Price held the 50 SMA and is retesting the high.  We will see what happens now.  Here is a look at the 195 minute chart.


I find it interesting that we spent the last 3.5 days inside the bar marked with the arrow.  The lack of volume the last two days is very clear on this chart.  Even the morning bars had light volume.  Today is the first day the last bar closed above the morning bar this week.  That almost didn't happen.  There was a mad buying panic the last few minutes to ensure the new high close. 

This was not a strong day despite the new high.  I once read some research that said when the Dow makes a bull market high there are usually about 6% of stocks making a new high.  I just looked at SPX and saw there were 32 new highs today.  The magic number of 6%.  The Dow, transports and financials are still well below their highs.  Can SPX stay above 1850 long enough for those indexes to reach the highs?  I seriously doubt it.  This is exactly what the final bull market high usually looks like.  A low number of new highs and diverges amongst the indexes.  SPX may creep a bit higher over the next few days, but I expect it will soon roll over and tank.

Bob

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