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Thursday, March 20, 2014

Daily update 3/20

Strange day.  SPX closed up .6%, but breadth was negative.  You just don't see that very often.  Today was a reversal of the FED day.  I mentioned last night it does that sometimes.  Tomorrow might be the real clue as to future direction.  Here is the daily SPX chart.

That .786 line held as resistance again.  Will it continue to hold or will SPX break through tomorrow?
There were only 96 new highs.  Volume was high today on the exchange, but low in SPY itself.  Check out the SPY daily chart.

Over the last two weeks there are three high volume down days and no high volume up days.  This looks like outright distribution on this time frame.  In fact that is true since the start of the year.  There are quite a few more high volume down days.  Lets zoom in to the 60 minute chart.

Once SPY got up near yesterday's high the pattern of alternating up and down bars showed up again.  You can see the same kind of pattern earlier in the month in this same area.  People are willing to buy the dip, even a little dip, but are not anxious to chase price higher. 

With negative breadth today both breadth indicators remain negative.  With new highs being so low the internals were much weaker then the indexes would suggest.  We clearly have strong resistance here.  It will likely take a positive catalyst to get the market higher.  Today's good economic data apparently was not enough.  Despite that good data the economically sensitive sectors like the tranpsorts, cyclicals and energy were weak.  The transports even closed in the red.

About now the bears are frustrated because every time the market starts down it reverses back to the highs.  The bulls seeing the resiliency in the market assume it will break out on the upside.  The single best indication of the strength of a bull market is new highs.  With the numbers this low the market is in a precarious position.  It is not a sure thing this market is going significantly higher.  Lets see what tomorrow brings.


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