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Thursday, June 25, 2015

Daily update 6/25 P&F chart

Downside follow through.  Since we started with a gap up the selling was not overnight news induced.  On top of Greece worries people seem to be noticing the transports are seriously breaking down.  Funny how things don't matter until all of a sudden they become important.

SPX closed slightly below the 20 SMA.  Are we headed back to the bottom of the channel?  Breadth was -62%.  Since we started with a gap up and positive breadth that was a pretty strong turn around.  New highs came in at 84 close to yesterday's number.  However, new lows shot up to 108.  Those stats would seem to indicate we are in pullback mode again.

The futures closed below the 100 SMA.  We don't have confirmation of a break yet though.  We also don't have any kind of an oversold condition either.  We could always get a bounce from the 50 SMA.

We have not had enough selling yet to classify any of the indexes as a short term down trend.  However, internals sure are weak.  That last pullback dinged them rather hard, and this bounce did little to repair the damage.  Here is the number of SPX stocks above their 200 MA as an example.

Some article I read talked about 60 being the point where the author starts to worry about the market.  We are there for the second time in the last couple of weeks.  I have spent a little time studying the last 15 years or so of this indicator and it appears it might work pretty well as a sign to hedge long exposure.  It looks like the bulls are on the ropes here.  After two down days in a row they might try to rally the troops tomorrow.  If not things might start to get a little dicey.  A weak bounce is not likely to help the bullish case.  They need to show some strength.

A blog reader (tnx Rick) was kind enough to send a link to this chart and noted support levels at 2070, 1990, and 1830.  Here is a marked up chart.

My studies of P&F charts are are severely lacking.  This chart presents a clear picture of where support is likely to be though.  Maybe I need to get a little more familiar with them.


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