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Wednesday, April 2, 2014

Daily update 4/2

Slight follow through.  Here is the daily SPX chart.

SPX closed slightly above the trend line.  We will have to see if it stays there and if it matters if it falls back below it.  If it stays above it that should mean we accelerate to the upside.  I don't think today told us much at all.  SPX got slightly red today, but barely before buyers stepped in.  We ended the day with only 55% of stocks positive and only 186 new highs.  I hate follow through days like today.  Here is the problem.  We did not do enough downside testing to ensure the break out is good.  At the same time the weak breadth and low number of new highs does not indicate a big rush by institutions to get in.  Inconclusive on whether we go higher or the break out fails.

The Dow got up to within a whisker of its all time high.  It fell four points short of a new high close. Maybe that comes tomorrow.   However, the transports did close at a new high.  If we do some down side testing the key levels are 1883 (prior all time high) and 1878 (prior high close).  Either of those levels could provide support.  If 1878 fails then we would have a break out failure and that could bring on some sellers.  That would leave us with an obvious triple top on the daily chart. This little spike high likely forced what few shorts are left out there to cover.  It will take rally chasers to push it higher from here.  I have no idea if they show up or not.  I guess we will see.


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