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Monday, April 21, 2014

Daily update 4/21

Very low volume push slightly higher.  Here is the daily SPX chart.

I put in the .618-.786 retrace zone.  It looks like we ended the day about in the middle of it.  I see the top line also corresponds with some prior highs from back in Feb. and March.  This might be very stiff resistance.  There is the potential for a very sloppy head and shoulders top forming here.  It is so sloppy I didn't label it.  I think it is pretty clear that if we turn back down we are likely to do so strongly.  SPX bounced off the 50 DMA, made a lower high, then bounced off the 100 DMA.  If we make another lower high I would expect it to break down through the 100 and head to the 200.  The relative weakness in the COMPX and Russell2000 would seem to back up that idea.  Lets take a look at the 60 minute SPY chart.

Even though the market crept higher this really looks more like a consolidation at the highs forming.  Whether that turns into a springboard for higher prices or a reversal remains to be seen. Most people will be back tomorrow so we should get a better look at how they feel about this price level.  With the 50, 100, and 200 SMAs in downtrend order a confirmed break of the 18 should be a signal we are headed lower again. 

One look at QQQ and IWM makes it pretty hard for me to believe this market is getting ready to break out and head higher.  I guess we will see, but don't be surprised if it turns again.  Sellers have showed up out of nowhere in this area with considerable conviction before.  We have had no selling pressure on this bounce yet.  What happens when we do?


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