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Monday, October 20, 2014

Daily update 10/20

SPX has arrived at potential resistance.  Here is the daily chart.

SPX ran into the Aug. low and the 200 DMA today.  There was a rather large drop in volume.  That looks more like a lack of sellers then aggressive buying.  That may change now that we are into a resistance area.  Even if we are going to go higher I would expect a pause here tomorrow.  While the Russell2000 was up nicely today it still closed below yesterday's high.  Its pattern remains suspect at the moment. 

This kind of pattern is a bit tricky.  With the technical damage we have seen a retest of the low has very high odds.  However, the timing of that event is a bit tough.  The current bounce could certainly carry higher.  It could also roll over right here.  All people that were buying since the end of May above the 1900 level are all under water now.  There is likely to be significant overhead resistance here.  However, the market sometimes pushes up into resistance somewhat before it rolls over.  If the news flow causes some selling pressure in the morning the sellers may come out of the woodwork.  If the news is positive they might sit back and wait for higher prices.  A close below today's low of 1882 is likely a sign the rally has ended and the retest is on.  If we get through the 1912 area mentioned last night then a test of the 18 SMA (1929) could be in the works.


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