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Friday, May 16, 2014

Daily update 5/16

Yesterday afternoon's bounce continued this afternoon.  Here is the daily SPX chart.


SPX probed below the 50 SMA this morning, but did not break down and eventually bounced in the afternoon.  It ended the day below the 18 SMA.  Do you notice anything odd about this chart?  Today was option expiration and yet the volume was higher yesterday then today.  Usually expiration day is the highest volume day of the month unless there is a big sell off.  Probably not important, but it is odd.  Since 4/28 SPX has probed below its 50 SMA on four days, but has bounced every time.  The last bounce made a slight new high and yet we failed to launch.  The more a level is tested generally the weaker it gets.  If we don't launch here very soon that MA will break.  Very unusual pattern as most of the time it breaks on the third test.  Lets zoom in to the SPY 60 minute chart.


SPY ended the day right at the 100 SMA.  It added another distribution bar this morning.  Clear as mud what it is going to do isn't it?  SPY is above the 18 SMA, but that MA has a pretty severe down slope so a break above is not very reliable.  This could roll over just as easily as continue up to the 50.  Lets zoom out to the weekly chart.


SPX closed above 1880 only once on a weekly basis (just barely at 1881).  It is clearly forming a very tight range.  It should be getting ready to do something soon.  For sure it is going to put me to sleep if it keeps this up.

I don't have any idea what happens on Monday.  With four trips below the 50 DMA already I don't think SPX will survive another one.  So the bulls need to get it going to new highs and beyond pretty soon.  Failed break outs often lead to big moves in the other direction.  SPX clearly failed the break out to a new all time high on heavy volume.  If we roll back over and break the 50 DMA it should continue down a good significantly.

The market and sector status pages have been updated.  Have a great weekend all.

Bob

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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.