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Thursday, May 3, 2018

Daily update 5/3

Bulls defend 200 DMA.

The market gapped down and headed lower.  SPY went down through the 260 option support.  However, it was very oversold on an intraday basis having gone straight down from yesterday's FED announcement.  Even though SPY got below 259.5 instead of accelerating down it bounced strongly.  The bounce ran into resistance about 1:30, but the bulls held on to the close.  Breadth was -57%.  New highs were 56 while new lows spiked up again to 119. 

The futures tested below the recent low, but bounced off my blue line that has been on the chart since late March.  I had to zoom out a bit to see where I drew it from.  It was from a 2/6 bar close.  It has been working has support ever since. 

The red count crossed above 50, but remains well below oversold levels.

The market keeps selling off and bouncing back.  While we had an oversold condition intraday today that is not the case on the daily chart.  That takes away a rather large reason to buy here.  The bulls are defending the 200 DMA, but nobody is coming in to chase the market higher.  Will today's intraday rally see follow through tomorrow?  I don't see any sign of selling exhaustion.  No nice volume climax low.  No big VIX spike.  Therefore there is little reason to think the sellers are done.  I suspect any bounce will still end up failing.  I think SPX needs to test that Feb. low.  It is taking its sweet time to do that and burning up a lot of dip buying fuel in the process. 

Tomorrow is the April employment report.  That has been market moving at times this year. 


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