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Wednesday, September 17, 2014

Daily update 9/17

That was a bit of a ho hum FED day.  However, SPX did test up above 2005 and found resistance again.  Here is the chart.

SPX closed below yesterday's high so there was no confirmation of the close above the 18 SMA yet.  That is not a very pretty looking candle on this retest of the highs.  Closing back below the 18 SMA (1997) would likely bring on some selling pressure.  There were 83 new highs and 61 new lows.  That is pretty shabby on a day when both the Dow and the transports closed at new all time highs.  The number of new lows is very elevated and is probably a bigger warning then the low number of new highs.  More and more stocks are breaking down.  Lets have a look at the futures chart.

The futures rallied past the high of yesterday's green bar.  However, they only managed 1 point on a closing basis.  Not exactly a lot of enthusiasm by the bulls here.  What are they waiting for?

When we were last here in early Sept. I said the market was in the weakest technical condition in this entire bull market.  On this retest we are even weaker.  The elevated  number of new lows is new this time.  Every other time we were around the highs that number dropped down to around 20 or less.  In Signs of a bull market top I wrote about several things that appear at tops.  However, the part that was missing at that time was a topping pattern.  The technical picture for a top is now coming into focus.  IWM clearly looks like a potential top.  Even SPX is looking like a double top with a slightly higher high.  Market internals are showing many divergences.  The number of stocks already more then 20% off their highs is really typical of what the start of a bear market looks like.  The technical picture has now joined all the other things that appear at bull market tops.  If the bulls fail to get a clear and decisive break out here I think the bears (are there any left?) will get their day.


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