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Friday, February 16, 2018

Daily update 2/16

Resistance found.

SPX hit the 20 SMA and found a few sellers.  Breadth was +56%.  New highs were 76 with new lows dropping to 25.  This is a logical place for sellers to show up.  This may not be the end of the rally, but some downward action looks likely.  If selling materializes we will have to determine if it is strong enough to end the bounce or not.  We could get some see saw action.

The futures ran up to the 100 SMA which provided solid resistance.  Price spiked up to the MA and sellers came out very quickly to send it back down.

The green count almost made it up to 50.  The intermediate line shows a lot of technical .  Usually the recent low gets retested in this situation.

SPX clearly ran into resistance at the 20 DMA.  Some kind of pullback seems likely here.  The sharp move up seemed to catch a lot of people by surprise.  The option sellers sold a lot of futures to hedge on the way down.  They were probably buying them back as price came back up through the strikes.  Now SPY is back to the scene of the crime (where the 2/5 crash started) today so there will be no more undoing of hedges to provide buying power.  We should find out if the volatility explosion has caused money managers to think about their risk levels.  I heard a money manager on CNBC say if managers were surveyed about 90% of them think the low will be tested.  That could easily make it a self fulfilling prophecy if true.

Have a great weekend.


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