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Tuesday, March 4, 2014

Daily update 3/4

What the heck was that?  Maybe if Putin will announce he is not going to attack the U.S. yet we could get SPX up to 2000.  After a huge gap up SPX motored to new all time high ground and stayed there.  Here is the daily SPX chart.

Sometimes the market does things that make no sense to me.  Sometimes I understand later as more information comes out.  Other times the moves just reverse because they really didn't make any sense to anybody else either, LOL.  This move really makes no sense to me.  Putin still has troops in Crimea and I am pretty sure he has absolutely no intention of pulling them out.  It would not surprise me if he moved in more equipment and supplies either.  Who is going to stop him?  Lets zoom in to the SPY 60 minute chart.

That was quite a gap up to start the day.  Big volume on that first bar.  Hard to say how much was short covering and how much was due to break out players.  There was a couple of elevated red volume bars in the afternoon.  That could be a little bit of distribution.  We will have to see what develops there.  This certainly is not a clear accumulation pattern yet.  Breadth was strong at 80% positive.  New highs were also strong with 301.  This is either a very strong break out or an exhaustion gap buying climax.  If it is an exhaustion gap the market is likely to reverse pretty sharply in the near future.  The Dow did not close above Friday's high and is still lagging.  The transports did better, but are still not at a new high.

What happens now?  I am not going to even try to guess.  This could easily just be the final blow off move.  We really need to see what happens when the market pulls back some.  It would not surprise me if tomorrow people wake up and realize that Putin has no intention of pulling back his troops and we sell off again.  That is the trouble with the market.  It does fake outs.  This could be a fake out break out or a real one.  Only time will tell.  The first level of concern for SPX is Friday's high of 1868.  That area was support on an afternoon pullback.  If that level fails it would be an early warning we could be reversing.  The next key level is 1850 of course.  If we close below that again I would expect selling pressure will dramatically pick up. 


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