If you would like an email sent to you when I update the blog please send an email with "subscribe" in the subject line to traderbob58@gmail.com. To be removed use "unsubscribe".

Search This Blog or Web

Tuesday, September 13, 2016

Daily update 9/13

Left over selling from Friday.

SPX closed fractionally below Friday's low.  I was wrong.  Last night I said " I am sure that a break of Friday's low will bring on a lot of selling pressure."  In my defense I did not expect SPX to break that low today.  Had it taken a couple of days or more I think the result would have been different.  However, it did it today and the market did not break.  The breadth was - 88% and the volume was 96% on the down side.  SPX tested its 100 SMA where it bounced.  The bulk of trading after 11:30 AM was in a range as the buyers absorbed all the selling pressure there was.  New highs were 17 and new lows were 32.  Not good stats.  However, the TRIN closed just over 3 (good for bounce). 

While SPX tested its Friday low the futures never got close to their overnight low from Sunday.  They are currently up almost  9 points from the 4 PM close. 

The red count got way into oversold territory again. 

This looks like a very good bounce setup and that is probably why the futures are up tonight.  Market internals were dreadful with most of the volume in down stocks, but the market did not break.  The TRIN over 3 at the close gives pretty reasonable odds of an upside gap in the morning.  I expected 2130 to be strong support and indeed it looks like it was.  Despite two days of extreme negative internals the bears were only able to push SPX down to 2127.  That is easily within the range of a normal overshoot of support.  The market did not break so the most logical thing to conclude is that support will hold for now.  This is option expiration week which normally has an upside bias to begin with.  It is possible this area has extra option support.  At any rate the bears failed to break things.

With the futures up a good bit already a bounce looks likely and makes logical sense from the 2130 support area.  What happens on the bounce is an open question.  Many people will conclude we will head to new highs and beyond.  If that happens it will make major changes to the trend table.  However, that may not happen.  This may be the perfect retest of the prior resistance and it is up and away.  On the other hand, the market may have started a correction and we end up with a dead cat bounce that rolls over and breaks support.  It bothers me that both XLF and the transports never really got going on the upside.  It also bothers me the economic data is not looking good.  There is clearly a risk the entire break out to new highs in July was a head fake.  Stay tuned.


No comments:


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