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Friday, March 14, 2014

Daily update 3/14

A mixed day.  Despite positive breadth all day SPX closed slightly lower.  Here is the daily chart.


I got the short term over sold buy signal today.  That signal is marked by green arrows.  It is extremely rare to get that signal and not be either below the 50 SMA or have a blue bar (close below lower Bollinger band).  Back in Jan. the market did not bounce significantly until the second signal. I don't think we are far enough down to make any kind of meaningful low here.  We might bounce on Mon. though.  To fire this signal it takes broad based selling.  They rarely happen in this close proximity.  We have had three already this year.  We only had two last year and the first one did not occur until June.  They happen much more frequently in bear markets of course.  Is this yet another sign of trouble?  SPX got a confirmed break of the 18 SMA today.  That means we need a confirmed break of the 18 on the upside to get bullish not just a close above it.  Lets zoom in to the SPY 60 minute chart.


There were a couple of big green volume bars today indicating some dip buyers swooping in.  It sure looks like it is trying to hold that support line.  The market actually bounced twice today and each time sellers drove prices back to yesterday's low.  The sellers did not break the market down though.   Will SPY bounce off that line?

This is a bit of a quandary in the short term.  We are a little over sold and could bounce, but there is no guarantee of that. In the past I have seen some large moves down after the over sold buy signal fired.  The worst one was in July 2011 right at the start of the meltdown.  Longer term this market is in trouble.  We have had two 90 percent down days and three over sold buy signals in just the first 2.5 months of the year.  That kind of selling pressure usually only happens in a bear market.  This just keeps looking more and more like a bull market top to me.   I think it is time to sell rallies again.

The market and sector status pages have been updated.  Have a great weekend all.

Bob

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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.