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Tuesday, April 15, 2014

Daily update 4/15

Strange day.  Up, down, up.  Here is the daily SPX chart.

SPX closed above 1840, but not very strongly.  Breadth was 58% positive which was weaker then yesterday.   Since the all time high day we have had 2 down days, 2 up days, 2 down days, 2 up days.
What happens tomorrow?  Does the pattern repeat with 2 down days or does it break.  There were 62 new highs and 54 new lows.  That was the most new lows in this pullback.  Lets zoom in to the SPY 60 minute chart.

There was a straight up launch from the low of the day in the afternoon.  Nobody on TV seemed to have any idea what that was about.  That put SPY back on top of the 50 SMA.  Notice how the previous 2 day bounce did exactly the same thing.  That time the sellers came out the next morning.  The volume pattern is still showing more big red bars then green ones.   Contrast the current pattern with the low in late March that preceded the move up to a new all time high.  There were some big green bars sticking out that are not there this time.  This is a real sloppy price pattern. The bounce from the low was never tested.  We have no way of knowing whether the sellers have been cleaned out or not. This has been really strange the last two days.  The sell offs intraday have been pretty dramatic only to see an equally dramatic bounce.  You can't say the market is boring these days. 

Just like last time the two day bounce alleviated any short term over sold condition we had.  However, the daily chart is weaker then before.  The intermediate trend indicator is down this time.  SPX managed to get up into the bottom of the trading range it broke down from, but that could be a kiss good bye type of move.   For tomorrow we have the same situation.  Either we get a confirmed upside break of the hourly 50 SMA, or we drop back below it.  An hourly close below probably signals the down trend is taking hold again.  The upside is a little tougher.  We need to see some real strength and close back above the 18 DMA.


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