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Monday, March 3, 2014

Daily update 3/3

Was that the shot heard around the world.  Oh wait.  There weren't any actual shots fired.  After spending two days positive on the year Russia ended the party.  Here is the daily SPX chart.

I have been talking about a lot of things looking like we are making a bull market top.  The last thing the market needs is major political uncertainty.  Despite the big gap down selling was muted as volume fell from Friday.  Dip buying was also muted so this was not a clear win for bulls.  Lets zoom in to the SPY 60 minute chart.

SPY gapped below the 50 SMA this morning.  On the plus side it closed a bit above the open.  On the negative side it crossed above the 50 SMA twice today, but failed to stay there.  We have three big red volume bars now so this chart may be changing over to distribution mode.  The bulls may be losing their grip.

We have had plenty of financial and economic uncertainty in this bull market.  However, political uncertainty has been confined to the middle east and has been sporadic.  Russia being involved this time makes for a much different situation.  Putin is not going to wake up one day and say gee I made a mistake let me get those tanks out of there.  This could go on for quite some time.  What is going to happen to energy prices?  Will the European economy slow down because of the uncertainty?  We won't know the answers to those questions for quite some time.  However, this situation may put a damper on buying enthusiasm.

I want to see SPY get back above the hourly 50 SMA and stay there before I can get bullish again.    The daily chart is neutral, but there is enough uncertainty in the air to be cautious.  The market was not real strong as SPX was making a new all time high.  Selling could pick up significantly if we continue down.


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