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Wednesday, April 30, 2014

Daily update 4/30

It only took four months to get 4 points.  The Dow made a slight new closing high.  Time to celebrate?  Here is the SPX daily chart.

SPX closed at a slight new high for the current bounce, but did not make a new all time high close.  The rally started after the FED announcement today.  We have seen many of the moves after a FED announcement reversed the next day.  I actually do not understand why that is.  It is just a phenomenon I have witnessed time and again.  I guess we will see if that is the case this time or not.  There were only 103 new highs today.  Those numbers continue to be pitiful.  Surprisingly there were 34 new lows.  That is really odd at the highs.  If we turn down that could be important.  We are back in the price area first reached in early March.  Two months to go nowhere.  Now that it is May is it going to continue up or turn back again?  Lets zoom in to the SPY 60 minute chart.

After the FED meeting we finally got the upside confirmation of the 50 SMA break.  However, we are now in resistance.  Not much more to say about that chart. 

There are obvious divergences with many important indexes.  Does it matter?  It is now May and everybody knows about the sell in May thing.  How will that play out this year?  Every year since 2010 there has been a multi week pullback starting in April or May.  In 2012 and 2013 we bottomed in June.  In 2010 the low was in July while the 2011 low was in Oct.  With the low number of new highs and many important lagging indexes it seems pretty hard to believe there won't be a more significant pullback in SPX then we have seen lately.

The margin debt data came out for March.  It seems the sell off in the momentum stocks lowered the debt by about $15 billion from $465 billion.  This may be significant.  In 2000 and 2007 the drop in margin debt marked the price highs.  Time will tell if it is the same this time.

Sellers have come out of nowhere for the last two months in this area.  I have no idea if they are done or will strike again.  I will be watching for a break of the SPY hourly 50 SMA for sign we are headed lower again. 


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