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Monday, March 10, 2014

Daily update 3/10

True to form so far.  From Friday's update "SPX had an outside day.  We had two of those back in Jan. marked with yellow arrows.  In both of those instances SPX closed slightly higher the next day then sold off. "

SPX closed fractionally lower, but pretty much as expected.  If SPX follows the script tomorrow should be down a little more significantly.  Here is the daily SPX chart.

Breadth was negative again today.  That is 3 out of the last 4 days that happened.  New highs dropped down to 106.  That is very poor when SPX was down only .87 from its all time high close.  We have a couple of hanging man candle sticks.  That may indicate a short term top is near, but they need downside confirmation.  I don't see any stocks in the Dow that made a new 52 week high today.  There were only 22 in SPX.  This market is doing a very good job of impersonating a bull market top.  We are not going higher without another shot in the arm of new highs.  Lets take a look at the SPY 60 minute chart.

SPY volume continues to dry up.  In fact the volume on the NYSE was the lightest since this rally from the Feb. low began.  We have a lot of alternating bars on this chart since the big gap up.  Some people are buying dips and others are selling rallies.  The question as always is which group has the most ammo.  Until one side runs out we are stuck.  With volume drying up we are likely to find out soon. 

The market is weakening internally despite the major indexes holding in there.  The McClellan breadth oscillator closed fractionally negative today.  Without a shot in the arm of bullish energy very soon we will head down.  The Dow still has not made a new all time high.  Is it going to give us another Dow Theory non-confirmation with the transports?

SPX found support today at the 1868 level mentioned several times.  That level might not survive another test.  If that breaks I think we will test the key 1848-50 area.   Closing below that should be a major negative.  Sellers are likely to come out of the woodwork.


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