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Friday, October 3, 2014

Daily update 10/3

The sun came up with no particular bad news and so the market followed through on the bullish setup from yesterday.  Here is a look at the daily SPX chart.

SPX closed back above the 100 DMA.  That event was enough to launch a move to new highs the last six times it pulled back to the 100.  Will it work yet again or will this time be different?  Breadth was 65% positive which was decent, but above 67% would have been a better kick off.  With about 30 minutes to go I looked at the total NYSE volume and I swear TradeStation was telling me the volume was 34% below yesterday.  I thought that was awful light at that point and looked more like a dead cat bounce.  However, tonight it now says the volume ended 3% higher then yesterday.  There must have been a lot of market on close orders.  The volume turned out to be decent after all.  This seems strong enough the rally should carry higher, but I don't know if it is strong enough to indicate new highs are coming.  We are still below the blue trend line and there is a possibility this is just a bounce up to kiss that line goodbye.  We will have to watch that closely to see what develops.  Some day the market is going to roll over into a bigger correction.  Now that the 100 DMA pullback has become widely known the odds of a failure to make new highs are higher.  Lets take a peek at the futures chart.

The day ended with a green price bar.  Now we need to see some follow through and close above the high.  Notice we stopped right at the 200 SMA.  There is also a lot of price action from that consolidation on the way down around here.  This is an area of possible resistance. I don't know if this will be a problem or not.  We might just power right on through it.

For next week I will be watching that 100 DMA.  As long as we stay above that the bulls should be in control.  On the upside we will just have to see what happens.  For more then a year these pullbacks seem to just keep gapping up until we get back to the highs.  However, earnings will be starting up and they could definitely have an impact.  The big rally in the dollar last quarter will have some affect on multinationals depending on how much revenue they get from abroad.  The dollar rallied against just about everything.  For the last couple of years analysts have been busy lowering estimates ahead of earnings season making it easier for companies to beat.  I don't think they did that this time so expectations are higher then they have been.  Will they still be able to jump over the hurdle?

Bloomberg TV host Trish Regan had an interesting article about the FED in the USA Today.  I highly suggest reading it. I think she is dead right.   Trish Regan: Yellen and the Fed's TMI problem

The market and sector status pages have been updated.  Have a great weekend all.


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