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Wednesday, August 20, 2014

Daily update 8/20

Test of the highs.  Oddly the futures and SPY made slight new highs while SPX did not.  Here is the daily SPX chart.

SPX is now very over bought short term as it tests its old high.  Will people be willing to chase price in that condition?  This was the first negative breadth day in this rally.  Since it was an up day for most indexes and at the highs that is pretty rare.  It might be temporary or a sign the rally is fizzling out.  We will have to see if it continues or not.  There were also less new highs today then yesterday 145 to 186.  People might be losing their nerve a bit here.  IWM closed down and back below its 50 DMA.

There sure are enough divergences around.  Does any of that matter?  It is pretty easy to imagine how this retest could fail, but you never know.  I have no idea what is going to happen now.  I still think the SPX 50 DMA is the best pivot for the down side.  We could easily pullback a bit from here and rally again.  It is still time to take it one day at a time and see what develops.

I have presented a number charts that show how this recovery is the weakest one since WWII.  None better then this chart.

I don't think there is any data that shows the disconnect between Wall Street and Main Street any better then that.  We may be creating jobs, but they must not pay very well.  The pundits can say what they want about how strong the economy is.  I still say it is pitiful.


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