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Thursday, October 20, 2016

Daily update 10/20

Odd intraday volatility, but in the end we went nowhere.

SPX tested the horizontal line again today and stopped.  I changed the color to red since it does appear to be resistance now.  Volume was heavy considering we did not go anywhere.  Interestingly, the sellers showed up right at 10:10 again.  They only sold for about 50 minutes though.  The market drifted back up to retrace most of the down move.  Breadth was -56%.  New highs were 73.  New lows picked up a bit to 19.   SPX closed below the 100 SMA after one day above.  The 20 SMA is just 3 points above today's high so it is coming ever closer.  The 50 SMA has rolled over and is sloping down adding a bit to the negativity.  The price action looks like it may be getting pinned because of option expiration.  If so SPX might not get very far from here tomorrow.   Maybe Monday SPX will get back on its journey. 

The futures tested above the 200 SMA again this morning and sold off sharply to test the 20 SMA.  It bounced from the 20 and ended the day right at the resistance line.  The 50 and 100 SMAs are coming down quickly.  They pressure the market lower if the futures can't get above them and stay there.

The green count shot up considerably today, but the red count also increased.  This is still neutral. 

The move down into the 10/13 low did not get much of a VIX spike.  We never got a high TRIN reading either.  There wasn't a nice oversold condition to entice buyers with.  There is no real technical reason for it to be an important low.  That would only happen with a news event.  I think it is likely the market bounced because of option support.  It is possible the resistance is option related also leading to the pin of price.  Unless we get some positive news to bring in the buyers early next week I believe SPX will head back down to test that 10/13 low (at least the 2120 area).  A breakdown there should target the 200 DMA.  SPX really needs to get a confirmed break above the 50 DMA.  With that MA sloping down that is becoming more and more important for bulls to achieve.


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