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Thursday, February 6, 2014

Daily update 2/6

It looks like the over sold buy signals finally kicked in.  Here is the daily SPX chart.

I hope anybody that was short heeded my advice from last night not to be the last one out the door.  SPX closed slightly above the 100 SMA.  Even though price dropped well below that MA on 2/3 there was never a lower close to confirm the break of the MA.  Now we are back above it.  That should be bullish in the short term.  We are still well below the 18 and 50 SMAs so there is considerable room to rally.  Lets zoom in to the SPY 60 minute chart.

SPY confirmed an upside break above the 50 SMA today.  There is an open gap up in the 182 area that the market might want to fill.  So far this looks bullish.  Here is the VIX daily chart.

The VIX rolled over today for the first time since the decline started.  This looks like a VIX peak to me.  That should mean a short term SPX low is in.  The VIX crossed above the weekly 200 SMA and every other time that  happened in the last two years SPX went on to new highs and never broke below the low associated with the VIX spike.  Breaking the recent low before making a new high would be a change to that pattern.  I suspect that event would usher in a flood of selling.

A break back below the SPY hourly 50 SMA would be a warning sign the bounce may be faltering.  I think I would want to see a break of the hourly 18 SMA which is currently below the 50 before getting bearish again.  I think the bulls have taken control of the market for now.  We will have to see how strong a bounce we get before looking longer term.  I suspect we might get to the SPX 50 DMA area.


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