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Wednesday, October 1, 2014

Daily update 10/1

Quite the splat to start the new quarter off with.  Here is the daily SPX chart.

The first day of Feb. started out very similar with a big meltdown day.  However, we rallied the rest of the month.  SPX closed below the 100 DMA again just like in Feb.  I actually heard a guy on TV right around the close talking about the prior six bounces from that line.  It is obviously widely known now.  That makes it more prone to failure then it has been. There are two scenarios in which it could fail.  One is we just keep going.  That seems a bit unlikely as we are very over sold short term.  The more likely failure would be to bounce here up to the 50 SMA or so and roll back over and through.  If we rally to  new highs then it will be yet another successful buy the dip at the 100.  This is the furthest we have been below our key trend line from the Nov. 2012 low.  Breadth was 73% negative and TRIN closed at 1.81.  I would have preferred to see the TRIN over 2, but maybe that is close enough.  It was definitely broad based selling.  The 60 minute futures chart is kind of interesting tonight.

I put these lines on here after the second peak on 9/24.  I thought about showing it on the blog, but it seems like every time I post a down trend channel it just blows up.  We are testing the lower channel line and the normal thing to do would be to head towards the upper line. Here is a look at the all important IWM chart.

IWM is testing major support.  There are already three points of contact on that line so this is number four.  Will the bulls show up here?  This is the line in the sand.

This is the seventh time SPX has closed below its 100 DMA since the May 2013 taper announcement by Bernanke.  The prior six times it reversed and headed back to new highs.  Will we get seven in a row?  The ball is in the bulls court now.  There is ample reason to bounce here.  Lets see if they do anything with it.  If for some reason we don't bounce I would expect SPX to waterfall down to the 200 DMA (1900) area. 


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