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Wednesday, May 14, 2014

Update 5/14

Late day sell off.  Here is the SPX daily chart.

SPX tested the support line today and held.  Will it bounce or break?  One day off of a new all time high close we had 13 SPX stocks make a new high.  That is pitiful.  Since Monday's buying spree we have had two days of negative breadth and no real sign of any buyers.  I said on Monday we are not particularly over bought because of the sideways range the last two months.  There is no excuse for the bulls here.  If they do not show up and drive this market higher it is because price is too high.  What else can it be?  Lets take a look at the SPY 60 minute chart.

We got some more distribution bars today.  SPY got a confirmed break of the 18 SMA this afternoon.  However, Monday's big gap up could provide support.  We got down near that important support today and held it.  The bulls may come out to defend that level tomorrow. 

Today confirmed yesterday's bearish looking shooting star.  The lack of any follow through does not bode well for bulls.  IWM closed back below its 200 SMA and gave up more then Monday's big 2% gain over the last two days.  I think more and more people are noticing the weakness in small caps and wondering why.  People are also starting to ask questions about why interest rates are falling.  Economic weakness is definitely one possible explanation for both phenomenon.  If enough people come to that conclusion there could be more selling pressure then we have been seeing so far.  The economic data may become important again.

I will not be able to do an update tomorrow.  I should return on Friday.  SPX 1885 is the first key support.  The 50 DMA (1867) is next in line.  If this market fails here expect volatile summer trading.


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