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Tuesday, July 29, 2014

Daily update 7/29

The pre FED day gap up strikes again.  As I theorized last night some people did sell into it.  SPY just touched the 7/24 low to fill the 7/25 gap down.  It stalled there until news of further sanctions on Russia came out.  That sent the market down in the afternoon.  Did that catch people by surprise?   I thought the market was supposed to be smart.  It could not see that coming.  Really.  Here is the daily SPX chart.

SPX closed slightly under the 18 SMA and the uptrend line.  The volume increased considerably today.  This continues to look like a W top forming.  If people want an excuse to take some profits the Russia/Ukraine situation might give it to them.  I suspect this is a long way from being over.  Lets take a look at the futures chart.

The futures did indeed kiss the trend line and turn back down.  This looks like the uptrend from the April low is over.  Do we continue sideways or enter a pullback?  The next support is the 100 SMA.  After rallying back above that line in April the futures never broke it on the down side.  Maybe this time will be different. 

For more then 18 months this bull run has laughed in the face of divergences that would normally stop a rally at least for a while.  This looks like the weakest technical condition of this entire bull market to me.  I don't think it will be quite as easy to shake things off this time.  Tomorrow is FED day and is a bit of a wild card.  If we follow through on the down side it is probably time for SPX to head down to the 100 DMA again.  This is one of the longer stretched between touches.


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