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Monday, May 5, 2014

Daily update 5/5

Another mixed day.  The dip buyers came out in force on the gap down, but guess where they ran out of steam.  Yep, you guessed it SPX 1884.  Here is the daily SPX chart.

SPX has closed higher then this only three times and that was in early April.  There were only 19 new highs in SPX and only 83 overall.  Breadth was negative all day.  Volume dropped noticeably indicating it was a lack of sellers today that allowed the market to rise.  Is that because everybody now knows that Tuesdays are always up?  It has been pretty widely publicized lately.  This is the first Tuesday that will start with SPX at 1884 resistance.  Will the bulls show up to push it higher?  Lets zoom in to the SPY 60 minute chart.

We had another distribution bar this morning.  Since May started we have 1 accumulation bar and 3 distribution bars.  Subtle shift in the pattern.  We will have to see if it persists.  SPY ended the day back above the 18 SMA, but did not confirm the break with a higher close. 

The gap down this morning put IWM at its 200 DMA and once again buyers showed up.  It looks like everything else is waiting to see if IWM decides to bounce off of or break that 200.  It seems to be taking its time in deciding.  It now has touched it 7 times over the last few weeks.  I would think a decision would be coming soon.

What happens tomorrow?  Will we get yet another up Tuesday or will it not work anymore now that it is widely known.  SPX has never been up at this level to start a Tuesday.  Will that make a difference?  Is the resistance in this area as solid as it looks?  The decreasing number of new highs is a major caution flag for this market.  Fewer and fewer stocks are still going up.  Bears need to get the confirmed break of the SPY hourly 50 SMA.  We gapped down below that this morning, but did not stay there.  Bulls need to see a very strong upside break out.  Any upside wimpy day like today is not going to give an all clear.


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