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Monday, April 14, 2014

Daily update 4/14

Bounce day.  Here is the daily SPX chart.

SPX closed back above the 100 SMA, but just barely.  Will it be able to stay there?  Last year all pullbacks ended around the 100.  Volume was really light today, even lighter then the last two rally days.  Breadth was 63% positive which is nothing to write home about.  It makes sense for the bulls to put up a fight here.  All last year it worked.  However, with so many momentum stocks breaking down that may not be the case this time.  Most of the other trips to the 100 had the VIX over 20.  At 17 on this pullback it is not showing much fear.  I am not convinced the sellers are done yet.  Lets zoom in to the SPY 60 minute chart.

We have had enough bars for the MAs to adjust to the dividend gap down so I am switching back to SPY.  They started selling right after the open and SPY retraced about half the gap up.  When it got close to the 18 SMA mid day it sold off even harder.  The late day bounce made the day look better then it probably was for the bulls.  Those moves in the last 30 minutes are not real reliable on future direction.

Will the bulls show up to play again tomorrow?  There is probably significant overhead resistance up at 1837-40.  We traded above there the entire month of March before breaking down from that trading range.  I suspect there are more sellers lurking up there.  So far this looks like a dead cat bounce.  A close below Friday's low (1814) would confirm the break of the 100 DMA and should target the 200 DMA (1762).  On the upside SPX needs to close back above 1840 with some strength.


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