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Wednesday, October 26, 2016

Daily update 10/26

Interesting day.

The market opened up a little lower and there was no rally in the first 30  minutes.  The 10:10 sellers did not show up.  At 10:30 the oil inventory came out with a surprise draw which spiked oil higher.  SPX began to rally sharply.  It came to a screeching halt at 11:07 as sellers suddenly showed up.  Not that they were selling hard.  They were just hitting the bids and price drifted lower.  SPX eventually hit a technical point and had a little mini flush before the selling stopped.  I have been saying 10:10 but there have been several days where the exact high was at 10:07.  So when I saw the high was at 11:07 it made me chuckle just a bit.  Markets are totally random.  There can be no doubt.  At any rate the sellers were clearly looking for strength to sell into.  They are distributing stock while trying not to break the market.  Breath was -62%.  New highs dropped way down to 45 while new lows increased to 44.  The sellers are having an effect as the market appears to be weakening. 

The futures confirmed a break of the 20 SMA.  They broke below the uptrend line then went back to it by the end of the day.  This is not a clean break of the line and if the bulls show up tomorrow we would be back above it.  If the bears show up again the futures are likely to test that 10/13 low.

The red count crossed above the green, but remains below 50.  This is still neutral.

The sellers are still active.  The question is how big a hammer do they have.  At this point they have shown no desire to sell into weakness.  That is certainly the sign of professionals.  It could be as simple as people raising some cash before the election.  However, it could be much more serious.  The fact the selling starts on time and has been going on for many weeks is a bit troubling.  While selling morning strength was a common occurrence in the last two bear markets the selling did not start on time.  It was much more random.  Here is another thought.  Remember all those bounces off the 100 DMA that started in 2013.  History shows the 100 DMA to be rarely important to SPX.  That was definitely some kind of market manipulation.  What if the group responsible for that upward manipulation is now trying to get their profits out.  I feel like I am getting into the realm of a conspiracy theory here.  I am usually the person debunking conspiracy theories, not creating them.  I can only guess at what is going on as I am not in the loop.  The only thing I can be sure of is that this market is not going significantly higher until they stop the persistent selling.  There is obviously downside risk if we start breaking key support levels. 

A close below today's low tomorrow would turn the short term trend down on SPX.


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