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Tuesday, May 6, 2014

Daily update 5/6

Just as I suspected.  Now that everybody knows that Tuesdays are up we get a down one.  Some things just never change.  Here is the daily SPX chart.

SPX closed just a bit above the 18 and 50 SMAs.  I think this was follow through from the pair of bearish looking candlesticks late last week.  Volume picked up a bit today, but was not heavy.  That means it did not take much selling to push SPX down .9%.  Buyers strike?  Lets zoom in to the SPY 60 minute chart.

SPY got a confirmed break of the 50 SMA today.  We got some more big red volume bars.  The shift towards distribution continues.  We will have to see if it stays that way in the days ahead. 

IWM closed below its 200 SMA today.  After all the touches in the last few weeks that may be significant.  Follow through will be key in case it is a fake out move.  QQQ was the poster child for the 2000 bubble and it led everything else lower in that bear market.  This time it is IWM.  I think it will be important to watch going forward.

The 1884 level held as resistance once again.  Now that it is May are the bulls going to keep trying to bust through?  Will the bears be more aggressive this time now that we have what looks like a triple top over the last couple of months.  This last rally attempt looked very weak to me.  The number of new highs never got higher then 139.  I think this market is really exhausted.  We clearly do not have any buying interest above 1885.  I have commented a number of times how this market looks heavy.  We have had a ton of upside gaps but still we don't go higher.  What happens if people decide to head to the exits?  We have not had a true spike in volatility in over two years now.  Is it time?

This market has been very choppy so predicting what happens the next day is pretty tough.  The bears tried to take control of the market today.  Will the bulls let them do it?  Downside follow through is key.  Bears want to see the 50 DMA (1864) broken.


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