If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Tuesday, May 20, 2014

Daily update 5/20

About face.  Poor retail numbers set a negative tone early on.  IWM turning back from its 200 DMA also seemed to spark some selling.  Here is the daily SPX chart.

SPX just kissed the 50 SMA and bounced.  That bounce sold off going into the close.  This is the fifth time in the last few weeks to test the 50 DMA.  The other four times it held.  Will the fifth time be the charm for bears?  It seems likely.  Lets zoom in to the SPY 60 minute chart.

SPY is once again showing a confirmed break of the 50 SMA.  This time after just a few bars above it.  Volume picked up a lot today.  SPY volume was almost double yesterday.  This chart looks more likely to continue down then to reverse up again.  I guess we will see if the bulls respond yet again.

SPX closed about 4 points above the 50 DMA(1867).  The bulls have tried really hard to get the market going up, but they just can't sustain trade above 1885.  We are getting close to three months now with no real progress.  Each rally attempt gets weaker internally.  How many more attempts do the bulls get?  Have we just run out of chances now?  Should we break the 50 DMA the next major support level is the 100 DMA (1847).  The break even point for the year (1848) is also in that same area.  Here is a look at IWM.

IWM has a fairly well defined down trend channel.  It turned back from the 200 SMA today on heavy volume.  It did a number of tests of the 200 before breaking it.  Now rejected with force from the underside.  This action looks like continued downside is in the cards to me.  What do you think?  Is the bubble starting to unwind?  I am starting to hear a lot more talk about this situation.  Some people are questioning whether this is some kind of indication the economy is not as strong as people think.  It makes sense to ask that question since small caps are very much affected by the U.S. economy.  The bloom is off now for sure and the over valuation makes it unlikely IWM will find a durable bottom without going considerably lower from here.  It is hard to believe that SPX will continue to hold up in that scenario.  Everything technically is consistent will a bull market top.  Be careful.


No comments:


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