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Tuesday, June 24, 2014

Daily update 6/24

Quite the reversal bar today.  Here is the daily SPX chart.

SPX put in quite the mid day reversal from an all time high.  People were trying to blame it on some headline about Iraq, but I really don't know if that had anything to do with it or not.  USO was down early today and did not bounce until an hour or more after stocks started down.  Maybe people were just looking for an excuse to take some profits.  At any rate we ended the day right at the key 1950 area.  Here is a look at the futures chart.

We ended the day below the 18 SMA.  Both the DMI and MACD lines have negative crossovers.  Last night I wrote "The market is now ripe for a pullback.  Will the bears pounce or stay in their caves?"  We got our answer today.  The bears did indeed come out to play.  Now it is up to the bulls to respond or not.  I want to show the IWM chart tonight.

I marked out a potential head and shoulders top forming.  Price got a bit above the left shoulder for a few days, but reversed sharply back below it today.  To complete the pattern it has to break the May low.  That may or may not happen.  If it does I think it will greatly increase the selling pressure across the broad market.  This index is still key to watch as it is in a bubble.  It will have the power to tank the market just like QQQ did in 2000.  Will it follow through on the downside or rip out to new highs?

SPX wiped out the post FED move and stopped right about where it was when the announcement came out.  It took a few more days then usual this time.  What happens now?  The market looked tired before the reversal bar.  I would think there might be some follow through selling in the days ahead.  Lets see what the bulls do with it tomorrow.  There have been some pretty ugly reversal bars since 2012 and the bulls came right out and bought it up the next day.  I guess we will see if they do it again or not.


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