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Tuesday, May 27, 2014

Daily update 5/27

Yet another upside gap today.  Here is the daily SPX chart.

SPX has a blue bar indicating it closed above the upper Bollinger band and is extended short term.  This is the first time it has done that all year.  It seems to me this last move up is like the move up in early April that got a lot of people bullish.  We keep making slightly higher highs then selling off.  Will this time be different?  Volume picked up a good bit today.  So did new highs.  There were 48 SPX stocks making new highs today.  While much better then Friday, this is still low at all time highs.  The prior closing high before the current rally was 1897.  A close back below that probably indicates another break out failure.  The failure at point 2 sparked a bigger pullback then at point 3.  It seems likely we would get a bigger downside reaction if it fails again then it did at 3.  What are the odds that happens?  Internally the market looks weaker then at point 2, but not much different then point 3.  TLT and the VIX were both up today which is a bit odd given the strength in SPX. 

SPX has been up four days in a row.  The last time it squirted up to new highs on a four day run was early April.  That rally sold off rather sharply.  Until we get some selling pressure and see how the market reacts we can't really know if it is different this time or not.


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