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

Thursday, April 10, 2014

Daily update 4/10

Wow.  I guess they rethought all that buying after the FED meeting minutes yesterday.  Here is the daily SPX chart.

SPX closed below a key support line and the 50 SMA.  Volume picked up again today, but does not look climactic.  Since the two day rally relieved the slight oversold condition we had there is no real oversold condition now.  The TRIN was not particularly high and neither is the VIX.  Not much of a technical reason to bottom here.  The intermediate trend indicator turned down again.  It needs confirmation with a lower close.  We clearly broke down from a multi week trading range, but follow through is key.  Just like upside break outs can fail, so can break downs.  I do not see any particular technical reason for that to happen like I did on the recent upside break out.  Just something to watch for in case it happens.  Lets take a look at the SSO 60 minute chart.

SSO closed back below the 50 SMA early in the day.  Last night I wrote " I will be watching the 60 minute 50 SMA.  Will we get a confirmed break above or fall back below?  An hourly close back below is likely a sign we are headed down again."  That worked like a champ and got me back on the short side early on.  In the afternoon SSO broke below the last swing low.  It then rallied back slightly above that low, but sold off again going into the close.  That looks like it tested the break down and decided it liked it down there.  That would seem to lower the odds that this is a false break down.

I don't see any sign the selling is over.  We don't have a technical reason for traders to jump in on the long side that I can see.  I would guess that means lower prices are ahead.  I would expect this sell off will echo around the world overnight.  All markets will probably be down significantly by the time we open.  That makes it hard to say what we will face.  A big gap up seems unlikely though.  There is bound to be significant overhead resistance above 1838-40 area.  Should we bounce up there it could make a good place to short.  The 100 DMA is just down below at 1828.  That provided support all last year, but that seems unlikely this time.  The long awaited trip to the 200 SMA may finally be in the cards.  I heard a number of traders on TV talk about selling rallies now.  That is a change in mentality from last year.  On the upside the bulls need to get SPX to close back above 1840 which would indicate a failed break down.  That would change the picture considerably.

If we continue down like I expect you might want to strap on a crash helmet.  I think the action at the highs indicates this market is heavy and the exit could get pretty crowded.


No comments:


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