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Wednesday, June 18, 2014

Daily update 6/18

Retest of high.  Here is the daily SPX chart.

Volume picked up considerably today.  Breadth was 68% positive.  There were only 47 new SPX highs.  You might recall we had 103 when we were up here before.  Lets have a look at the futures chart.

The 10:00 bar confirmed yesterday's break out.  That set up a run to a new all time high after the FED announcement.  Now the tricky part.  Obviously the new high data was not nearly as strong.  Neither is the breadth data.  There are lots of divergences everywhere.  The ADX is not strong like it was before so the odds of coming back here soon if it does turn down are not as high. 

The really big issue though is the tendency for the market to reverse FED day moves in the next day or two.  Turning back from here would leave an obvious double top.  The daily chart is in position to turn down very easily.  It is up to rally chasers to propel the market higher.  We will have to wait and see if they show up or not. 

I think I found the chart to watch for an energy price problem caused by Iraq.  Here is chart of the national gasoline price.

Historical Price Charts

The big sell off in 2011 and the two lesser corrections in 2012 all occurred after the gasoline price got above $3.80.  Price is currently near the high end of last year's range.  It did not cause serious trouble, but then again it did not stay here long either.  It is clearly not far from a problem level.  It may or may not be a problem if it spends a prolonged time period around here.  We just don't have enough data to know.  We will see if Iraq causes further increases or not.

Here are a couple of interesting articles on China.  I still believe China is experiencing very similar financial stress to what the U.S. had in 2007 just before things really blew up.  Just keep in mind their debt problem is way, way bigger.
China's Brewing Subprime Crisis
Chinese companies have racked up $14.2 trillion in debt—more than any other country on the planet


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