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Wednesday, May 23, 2018

Daily update 5/23

FED minutes sparked a buying frenzy.

After a sizeable gap down SPX reversed and closed at a slight new rally high.  Volume was good.  Breadth was barely positive.  New highs fell way down to 35.  New lows picked up a bit to 54.  SPX tested its 100 SMA twice intraday.  It found buyers both times.

The futures dipped below the 20 SMA overnight.  However, the bulls started buying at the open.  After a bit of a rally the morning low was tested and the buyers stepped in again.  The futures formed a triangle pattern just above the lows on intraday charts until the FED minutes came out at 2 PM.  I do not know what they said, but the buying was unmistakable (17 points).

The green count turned back up, but remains below 50.

After today's reversal some follow on buying tomorrow morning seems likely.  Whether that will be enough to cause a break out over the 5/14 high remains to be seen.  Investors did not appear to want to sell into this morning's gap down.  That allowed the bulls to hold price up.  Did the buying frenzy caused by the minutes really change things?  Good question.  Most of the time FED related news has only a limited affect.  I don't know if the people that were selling around that 5/14 high are done or not.   Maybe the news will cause them to step back.  This is the problem with not getting a proper climax sell off at the lows.  There was no selling vacuum for the market to rally into.  If the market gaps up tomorrow the sellers may come right back.  It is really hard to say.  A close below the 100 DMA seems pretty likely to be trouble now.


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