If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Tuesday, March 25, 2014

Daily update 3/25

Inside day, but another gap up sold into.  Here is the daily SPX chart.

SPX closed slightly above its 18 SMA again and right around the area of the uptrend line.  Volume declined on this up day.  Overall the market was mixed a bit as small caps and financials closed red.  The COMPX was showing relative weakness, but did close positive.  So the sellers showed up early to knock down the big gap up.  At the flat line dip buyers stepped in and buoyed the indexes the rest of the day.  Late last year and in Jan. when the market stalled at the highs I commented on how it looked more like a lack of buyers rather then sellers that stopped the market.  This is sellers stepping in here for sure.  The dip buyers rush in on the dips, but price is not just sitting around at the highs waiting to dip.  There are sellers here that have stopped the upward progress.  Three gap ups in a row did not convince them to hold on.  Until they stop selling we are not going significantly higher.  Lets zoom in to the SSO 60 minute chart.

SSO gapped up above its 50 SMA, but sold off right away back below it.  The dip buyers rushed back in and kept it above that MA all the way to the close.  However, it never confirmed the close above the MA.  It also seems to have found resistance at the 100 SMA.  The 18 has now crossed below the 50.  This chart is in a slightly more bearish configuration then it was yesterday.  Time will tell if that makes any difference or not.  So far the dip buyers have kept showing up.  I want to show the SPY 60 minute chart as well tonight.

SPY is below its 50 SMA, but only because of the ex dividend gap down.  That makes it irrelevant.  What I wanted to show was the volume pattern.  There are more big red volume bars then green ones at the moment so this time frame is showing some distribution.

There is money moving around.  Big cap stocks with lower valuation are seeing some buying while the big winners from last year are seeing the selling.  One thing that can cause this is nervous money managers.  Some of them have a mandate to stay invested and when they get nervous they tend to rotate into value plays to ride out corrections.  I think they have good reason to be nervous.  Despite SPX being up .44% and just a tad off of all time highs we only had 80 new highs.  SPX stocks saw only 22 new highs which is the lowest amount I have seen yet.  Unless we get a strong positive catalyst that energizes the bulls to push prices higher it is only a matter of time before we pullback.  The longer we sit here sucking up the dip buyer's dry powder the deeper the pullback is likely to be.


No comments:


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