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Thursday, November 13, 2014

Daily update 11/13

Curious day.  Here is a look at the SPX chart.

Last night I pointed out the 6 SMA was coming up to the upper trend line and one of them was going to have to break.  SPX tested above and below both of those lines and didn't like it either way.  We ended the day at 1839 and that makes four closes in the same area.  What we have here is perfect equilibrium.  Despite SPX closing up slightly the breadth was 62% negative.  IWM was down 1% which is inline with the breadth reading.  Money still seems to be seeking safety in big cap stocks.  Volume was kind of high for a day that ended up going nowhere.  Both bulls and bears were actively participating. There were 202 new highs and 69 new lows.  Oil made a four year low which put pressure on energy stocks.  That in turn made the new low number even higher then it has been lately.  Lets have a look at the futures chart.

We have the first red price bar since this rally began.  I am not sure I have ever seen it go that long before.  This is some move.  Price is still holding above the 18 SMA.  Does it break or bounce tomorrow?

IWM more then reversed yesterday's up day.  I think the market was weaker today then the big cap indexes made it look.  With four days closing in such close proximity SPX could be winding up for a decent move.  We should be moving into tax loss selling season which could put some downside pressure on the market.  Everything seems to be in place for a short term top here.  Just a question of whether any real selling pressure materializes or not.  As an example of the internal divergences here is a look at the number of stocks above their 200 SMAs.

That is a rather large divergence and is consistent with a bull market top.  Here is a look at the common stock advance decline line.

Breadth has been much stronger then volume on this rally.  However, this indicator is still showing multiple negative divergences.  Still toppy looking.  The bottom line is we have bullish sentiment off the chart and a poor technical condition.  That usually resolves to the down side.  Will it be different this time?


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