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Wednesday, April 23, 2014

Daily update 4/23

A little profit taking in SPX, but not too bad.  IWM, QQQ, and IBB were down considerably more.  Here is the daily SPX chart.

The move down may have been small, but the volume was nearly as heavy as yesterday.  A noticeable drop in volume would have looked more bullish.  This indicates there were quite a few profit takers today, they just did not overrun rally chasers.  Lets take a look at the SPY 60 minute chart.

SPY sold off a bit early in the day, but that low held.  Price settled in to the 18 SMA as support.  This looks similar to the pattern back around 4/3 where the market gapped up the next day and sold off hard.  SPY is near all time highs, and still stretched away from the 50 SMA.  That makes buying above yesterday's high seem pretty risky.  The futures are up on AAPL earnings tonight so a gap up seems likely.  With QQQ and IWM much weaker then they were back at the high in early April people may not be in the mood to chase that higher.  May is right around the corner.  It has to be really difficult for money managers to put money to work now.  This is tricky up here, be careful.  I think a break of the 18 SMA would be a good sign the down side is kicking in again.

This is kind of odd.  Check out the Nova/Ursa ratio chart.

This chart is not updated for today yet.  The drop in the indicator back below zero was from yesterday.  On a strong up day that seems odd.  Notice the 14 DMA.  It did not show the strength into the high earlier in the month or now that it showed into peaks all last year.  It has been declining ever since the early March high.  The last pullback saw a very negative reading which has not been even close to being matched on the upside yet.  Notice how that was not the case before March.  Before that downward spikes were matched with bigger upward spikes.  This looks similar to the pattern from the fall of 2012.  I don't have the chart handy, but there were three peaks between Sept. and Oct. in SPX that led to the bigger pullback in Nov.  The 14 DMA was declining on each of those peaks just like it is now.  I think this means traders are quite hesitant here to pile in.  Another caution sign.


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