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Tuesday, September 9, 2014

Daily update 9/9

A little bit of selling.  I thought selling had been outlawed.  I guess there are a few people out there that didn't get that memo.  Here is the daily SPX chart.

SPX closed below the key 1991 level and below its 18 SMA.  It held above the important 1986 level though.  Volume increased and breadth was 75% negative so it was a serious distribution day.  Will the bulls buy the dip yet again?  Lets take a look at the futures chart.

While SPX closed below its July high the futures did not.  We have a little bit of a disagreement there.  We now have three blue price bars (indicating price was below the lower Bollinger band) in a row.  Most of the time the futures actually bounce after a blue bar.  On the rare occasions where there is more then one the odds favor more downside to come.  You can see on this chart where it bounced after the first two times there were blue bars and continued down the third time with back to back blue bars.  Even if we bounce off the green support line tomorrow the pullback might not be over.  The MACD crossed the 0 line today giving the bears a little more support.  Lets see what the IWM chart looks like.

IWM closed below the neckline of the possible head and shoulders pattern I mentioned last night on an increase in volume.  This could be the end of the rally off the Aug. low.  Follow through is key though.  It could be a false break down. 

SPX closed below its 18 DMA for the first time since the Aug. low.  That is a common bounce point.  The futures are also sitting on support.  In the absence of bad news the bulls might try to engineer a bounce tomorrow.  If we follow through on the down side instead then we are likely in pullback mode and headed for the 50 DMA.  Today's action forced me to downgrade the trend status table.


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