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Tuesday, February 21, 2017

Daily update 2/21

More panic buying.

SPX is approaching 9% above its 200 SMA.  It has not been that far above that MA since 2013.  Breadth was +68%.  New highs expanded to 270 which was the highest since 1/25.  I don't really know what else to say about this chart.  FOMO is strong at the moment.

Last week I mentioned the futures hit the upper channel line and bounced which could continue the rally.  The bulls took that positive setup and ran with it some more.  A confirmed break of that upper channel should indicate a longer pause/consolidation phase is starting.

The green count turned up again, but is a bit below the prior peak.  The bulls are still firmly in control at the moment.

The trouble with this kind of pattern is there are two quite different scenarios it might end with.  Will we get another consolidation phase or a sharp reversal.  It is possible that we keep going until everybody gets in that wants in.  That could leave us with a bit of a buying climax that leads to a sharp reversal rather then a consolidation.  Too bad there is no way to know.  We will deal with that once it stops going up.  Keep in mind the market is extended enough that could happen at any time.  Of course an extended market in runaway mode can keep on running.   I would venture a guess that this price pattern will make nearly everybody look a little foolish in the end.  Most people will either sell to soon or too late. 


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