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Monday, December 1, 2014

Daily update 12/1

Hmm, odd day.  AAPL flash crashed this morning and the transports got crushed.  Rather strange way to ring in the month of Dec.  Here is the daily SPX chart.

SPX closed below the low of the potential exhaustion gap day.  If that was an exhaustion gap then we should not be making new highs anytime soon.  Theoretically a bounce to new highs would then make that a low probability scenario.  There were 151 new highs and 238 new lows.  That is a rather amazing amount of new lows one day off closing highs.  The breadth was 75% negative so the selling was broad based.  Was that a one day wonder or the beginning of a real pullback?  Lets take a look at the futures chart.

The futures found support at the 50 SMA and are still sitting on it tonight.  The MACD has crossed negative for the first time on this rally.  The -DI line is the highest it has been on this rally, but still has not crossed the key 35 threshold.  That would be an important sign this could turn into a sizable pullback.  Lets see what happened to IWM today.

That potential double top looks a lot more possible now.  I mentioned a few days ago it could tip over pretty easy and so it did.  It did not take out that last swing low so the bulls still have a chance.  Now lets take a peak at the transports.

The volume was strong in this index on the rally.  Lower oil prices are good for transports.  However, somebody changed their mind today.  That was quite a smack down on volume.  It closed below its last swing low.  Two weeks worth of gains up in smoke in one day.  Here is a look at AAPL another odd chart of the day.

Somebody sold a truckload of AAPL at market this morning.  It reminded me of something I heard some time in Nov.  They ran a story on CNBC that billionaire hedge fund manager David Tepper was going to return 10-20% of his fund to investors by Dec. 31.  Just about every hedge fund on the planet has AAPL as one if their largest holdings.  This could easily have been Tepper today if he was in a hurry to sell the stock.  I guess the question is how much stuff does he want to sell and is there enough liquidity to absorb it this time of year. 

Today was surely oddly negative for the first day of the month.  Does the selling beget selling or buying?  We never saw any serious selling pressure at any time on this rally.  There were no shake out moves to dump fast money players off.  With such a big move in such a short time there could be an urge to lock in some profits.  We tested 2040 on multiple days back in Nov. so that is key support.  Breaking that is likely to increase selling pressure considerably.

There are some changes to the trend table tonight.


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