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Tuesday, October 25, 2016

Daily update 10/25

Morning high and afternoon low once again.

The market gapped down a little bit and rallied from the open.  Guess what happened at 10:10.  Yep, it happened again.  SPX closed back below the 20 and 100 SMAs.  Breadth was -59%.  New highs dropped down to 74 and new lows picked up a bit to 31.  Yesterday's second kiss of the bottom of the uptrend line from the Feb. low resulted in a second rejection.  That could set up another test of the 2120 area.  SPX has bounced twice from that level this fall with the second bounce being weaker then the first.  It seems likely if we test down there again it might fall through this time.

The futures are down a few points after hours.  They ended the day above the 20 SMA, but are now below it.  The futures are down to an uptrend line from the recent low.  Maybe they bounce here.   

The green count turned down today, but remains above the red count.  Still neutral.

The bulls have clearly been trying to support the market here.   However, their task is very difficult because the sellers keep showing up at 10:10.  I don't know where the futures will be in the morning, but for now rallies just can't be trusted.  At the same time key support (2120) is holding for the moment.  Eventually 2120 is going to break or the bulls will manage to get SPX back above the 50 DMA.  Until one of those things happen the price action may continue to be pretty choppy.


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