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Wednesday, November 5, 2014

Daily update 11/5

The market gapped up to new highs on the futures, but once again sold off immediately.  I want to look at SPY again tonight.

Today was another hanging man doji bar.  That gives us four doji bars now with two of them being hanging man candles.  What an odd pattern.  SPX was up .57%, but breadth was only 56% positive.  It started out 71% positive on the opening gap up.  There was some selling into strength today.  The COMPX actually ended slightly in the red.  There were 257 new highs and 67 new lows.  Even with a big gap up to start the day and oil stocks up today the number of  new lows remained elevated.  I think that is still a big caution flag.  Something isn't quite right.  Here is a look at the futures chart.

The price bars went back to green in the night for the gap up.  They actually made a slight new high at the open.  However, the sellers went to work right away.  There is clear resistance here.  It is not just an absence of buyers.  However, they stop selling once price gets knocked down a bit.  Who runs out of ammo first the sellers or the dip buyers that come rushing in on the sell off?  While we have stalled here the 18 SMA is catching up.  Breaking that would probably be a good indication we are starting a pullback.

The longer we stay in this tight range the bigger the move should be when we break out.  I don't know how much longer it will take to make the decision.  Breadth is starting to weaken a bit so buying interest might be drying up some.  This is an important decision being made.  We might still have a few more days to go.


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