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Monday, January 12, 2015

Daily update 1/12 Downside follow through

The sellers hit the market immediately after the open.  It only lasted for 30 minutes though.  The rest of the day was a sideways chop.  Here is the SPX chart.

While yesterday SPX only closed fractionally below the 50 SMA there is no question about it now.  The price bar is red again.  Since it was red before the white bars this should indicate the short term trend has turned down again.  That is also true of the COMPX, but not R2000.  The breadth was 61% negative, very close to what it was on Friday.  New highs were 188 and new lows were 143.  Once again we have somewhat high numbers of highs and lows.  The loopy price action continues.  SPX broke the 2012 trend line twice before, but then bounced back above it.  This is the first time that it looks like it went back to kiss it good bye.  I have had this nagging feeling that the Dec. high is the top for this bull market.  The evidence is still pointing to that as a distinct possibility.  Lets see what the futures chart has to say.

The futures bars are still white, but it will not take much now to turn them red.  The MACD and ADX are on sell signals.  The Dec. bounce off the SPX 100 DMA was the shortest lasting rally in the series of bounces.  This one is starting to look like it has already peaked.  The futures have recently bounced off the 200 SMA twice.  They are less likely to bounce again if tested in the next few days.  They need to get back above the 100 SMA (2047) to get out of trouble.

Both of these charts show downward pressure on prices.  The bulls bid up the futures overnight, but were selling off going into the open.  Then they got slammed right from the open.  Oil was busy making new lows yet again.  Investors are getting nervous.  The market is clearly becoming more and more unstable.  I don't know what else to say really.  Between the goofy price action and the high numbers of new lows and new highs this is reminiscent of 2000.  That is the only other time period I have personally seen that resembles the current action.  Maybe the end result will be different this time, maybe it won't.  It certainly would be a good time to have a market crash plan.  What would you do if the market tanked 50%?


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