SPX gapped down below our support arwa this morning and proceeded down to the next support. That 1820 level came from Oct. 2014. Mid day the market bounced strongly off the lows. I heard someone say that might have been some short covering in front of the ECB meeting tomorrow. I guess I need to pay more attention to those as we have seen rallies in front of those meetings before. I did not realize they had a meeting tomorrow. Such is the world we live in now. The breadth was -96% early in the day which looked like climax selling kind of action. It ended the day -73%. New lows spiked up to 1358. That is a selling climax kind of number. Volume was heavy which could be climatic.
The last several days shows ADX falling. The downtrend has been weakening some. It just looks like the market is trying to find support around here. We will have to see if it accomplishes that or not.
There is a slight positive divergence in the red count. Not enough to really get excited about, but as oversold as we are a bounce would not be surprising. This could be the sign of one developing.
We have had a lot of big gaps up and down lately. The overnight news flow is really driving the market crazy. It also makes predicting the next day pretty tough. The situation is that we are extremely oversold short term in an extremely important support zone. That means there could be a tug of war between the bulls and bears. So far the bulls have not been doing much tugging. Maybe they will get a little more gumption now that we hit 1820. The next support below here is 1730-1737, but I think that is minor. The next really strong support below is 1552 to 1576 (the 2000 and 2007 highs). I would be surprised if this bear market ends before we get there. The ECB meeting tomorrow is a bit of a wild card tonight. We will have to wait and see if there is any market impact. I think the bulls have a chance to pull off a bounce. Do they have the desire?
Bob
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