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Friday, November 21, 2014

Daily update 11/21

That was some day.  Here is the SPX chart.

It is rare to see an opening gap on SPX because they start updating it before all the stocks are open.  However, today's gap up was big enough to show a clear gap.  Thank you China and ECB.  Investors did not waste any time looking the gift horse in the mouth as they started selling right on the open.  The selling continued for hours with no sign of a big buyer anywhere.  That opens the door for this being an exhaustion gap.  We will have to see what happens next week.  Breadth ended the day at 64% positive after starting out 87%.  There were 225 new highs and 14 new lows.  That is the first time the lows dropped down to a reasonable level.  However, that is not a lot of new highs.  We had a number of days over 300 previously in this rally.  I can't blame anybody for not wanting to pile in long on this price pattern though.  I believe today ties the longest streak of days closing above the 5 DMA.  While the streak can certainly continue you have to think it won't last be much longer.  Certainly not the ideal time to be adding long exposure.  Here is a look at the IWM chart again.

While IWM had a big gap up it never traded above the recent swing high.  Like SPX it started selling off immediately and completely closed its gap up.  Will this turn into a very short term double top or will the bulls take control?  It closed below the high from three days ago so it did not quite turn its trend to neutral today.

The NAAIM survey dropped from 85 to 72 this week.  Some of the big boys were taking some money off the table recently.  There certainly was no sign they were putting it back on today.  We should be coming into tax loss selling season.  The energy stocks were smacked so hard it seems like there could be another bout of selling in them.  That might carry over to the broad market if that happens.

We have a very extended market with many technical divergences.  Today could have been an exhaustion gap.  Next week might be important.  If this was an exhaustion gap then a close below today's low could spark some selling pressure.  I don't really have any idea what to expect if we do head down.  I can find no historical pattern that comes even close to that SPX daily chart.  Some times big fast moves get completely retraced, some times they don't.  I heard them say on TV this week that SPX has been up the last six weeks of the year every year since 2004.  I don't miss many patterns, but for some reason I did not know that.  However, now that everybody knows it will it work this year?

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


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