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Friday, January 16, 2015

Daily update 1/16 Support held

The put support at SPY 200 I have been talking about played out today.  Not crashing early in the day emboldened bulls to jump into a slightly oversold market.  Here is the SPX chart.

SPX dropped down through the 2011 trend line earlier in the week.  Today's bounce came right back to the underside.  Is it a kiss good bye or will we get back up through it?  SPX closed a bit below yesterday's high.  While volume was higher then yesterday it was a bit light for an expiration day.  Breadth was 79% positive which is an extremely strong day.  There were 243 new highs and 98 new lows.  The split statistics continue.  I guess the close below the 100 DMA brought out the buyers once support proved itself.  Lets look at the futures chart.

The futures managed to get slightly above the 200 SMA.  We have a white bar so we have worked off the oversold condition and are back to neutral.  There isn't enough here to tell if we have made any kind of important bottom or not yet.  We certainly had enough strength there could be some more upside follow through.

Next Thursday the ECB is widely expected to launch some type of QE program.  Markets have been conditioned to expect that to be good for stocks.  Even though it is in Europe I have been wondering if it would not provide some upside excitement all around the world including the U.S.  This may have been the start of an ECB QE bounce.  We might see yet another really big bounce.  What happens after that announcement is hard to say.  Draghi has been long on words and short on action.  Will they do enough to make the markets happy or disappoint.  Beats me.  If they come up short of expectations look out below.  How in the world can you handicap that?  I am glad I am not running billions of dollars.  If we do  not follow through on the upside Tuesday next week could get ugly.  The option support will be gone.  I have no idea if the selling is exhausted or not.  I am sure volatility will stay elevated.  The price direction is not so certain.

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


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.