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Wednesday, April 9, 2014

Daily update 4/9

Bounce target reached and a little extra.  Here is the daily SPX chart.

Early in the day the market was up some, but internals were weaker then yesterday.  It seemed to be struggling to go higher.  Then the FOMC meeting minutes came out at 2:00 and sparked some buying.  SPX closed slightly above both its 6 and 18 SMAs.  Here we are back at 1872 again.  SPX really struggled to stay above that level all last month.  Now the QQQ and IWM ETFs are in much worse shape then they were then.  Is it going to be any different this time?  Lets zoom in to the SSO 60 minute chart.

SSO closed above the 50 SMA, but is not confirmed yet.  We have blue bars so price is a bit extended on this time frame.  We retraced just about half of the sell off.  What happens now?  Here are the IWM and QQQ daily charts.

Both these ETFs are still below their 50 SMAs.  Both are market leading risk on/off indicators.  Before the key reversal day last Friday I said that the market is not safe for bulls until both these indexes make new highs.  I stand by that statement.  Only they are further away now then before.

What happens tomorrow?  A lot of FED meeting moves are retraced the next day, both up and down.  I never really tracked it on meeting minutes.  I have to wonder if the minutes are really more important then actual FED policy moves.  It is a strange situation and a bit unpredictable. 

Here is what we know.  SPX has had trouble staying above 1870.  Some key indexes are already below their 50 DMAs.  There were only 80 new highs today despite the magnitude of the up move.  Volume dropped from yesterday.  The short term over sold condition we had has been worked off.  We are in a neutral state now.  The power is up for grabs.  Who will show up tomorrow?  I will be watching the 60 minute 50 SMA.  Will we get a confirmed break above or fall back below?  An hourly close back below is likely a sign we are headed down again.  An hourly close above that last bar's high would be upside confirmation and could set up a test of the all time high.  If we roll back over that 1837-40 area is key support.  I expect there are a bunch of stops just below that somewhere.  That would be an important break down if it happens.

Here is an interesting look at some charts.  Would You Buy These Charts?


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