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Wednesday, August 24, 2016

Daily update 8/24

A little follow through selling today.

Curious how the upper line on the megaphone pattern has been holding as support.  Probably just coincidence.  SPX closed below the 20 SMA for the first time since breaking out back in July.  The breadth was -66%.  New highs dropped way back down to 107.  This is two days in a row we hit new lows late in the day.  Ever since the break out all the selling was done in the morning hours as dip buyers came in to hold the market up.  This is a change in behavior, but it remains to be seen if it is just a short term phenomenon.

The futures ended the day right on the key 50 SMA.  The 100 is just a little further down.  We remain in the sideways pattern for now.

Sill in limbo.

The intraday action and the close below the 20 DMA indicate a possible change of behavior in the market.  It is possible we have started a pullback, but we have yet to break any important short term support.  SPX and the COMPX turned their short term trend to neutral again.  The last turn up produced nothing in SPX.  R2000 remains up.  Upside momentum is completely gone, but the sellers have not been ambitious so far.  Yellen will be speaking at the Jackson Hole conference on Friday.  As dovish as she usually is I can't imagine many people would be selling in front of that.  Today might have been a little hedging just in case she says anything about rate hikes.  A bounce tomorrow in preparation for an uber dovish speech might be possible.  Next week might be more interesting.


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