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Wednesday, October 22, 2014

Daily update 10/22

After the rocket of the last four days there was actually brave (stupid) souls willing to chase prices higher this morning.  They ran out of steam mid day and we sold off into the close putting all those fresh buyers underwater.  Been there done that.  Didn't like it.  Here is the daily SPX chart.

SPX closed just slightly above the 18 SMA.  However, that is not the most bullish looking bar there.  Volume was almost as heavy as yesterday.  Was that a pause day or the start of a reversal?  Breadth was 67% negative which is a bit high for a pause day.  There were 100 new highs and 26 new lows.  We are going to need to see a lot more new highs to keep the market headed higher.  Here is a look at the futures chart.

We got a white price bar at the close today.  That means the upside momentum has waned.  The DI lines barely have a positive crossover.  This is not the strongest of looking charts.  We got to the upper Keltner channel today, but did not make it to the 100 SMA.  After being below the channel for a while like we were on the way down that upper channel line can be pretty stiff resistance.  IWM had a bad day.  Here is the chart.

It closed below yesterday's low on an increase in volume.  This is still the key thing to watch in my mind.  This bounce started from the 500 SMA.  It has gotten above the very important green line, but will it be able to stay there.  If this bounce fails it is likely to break down below that 500 DMA.  A lot of people watch that for longer term trades.

I don't think today did enough to say the rally is over.  However, if we follow through on the downside tomorrow it very well could be.  This bounce looks a little precarious to me.  I think the 1925 level is key to hold tomorrow.  A close back below that could be trouble. 


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