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Tuesday, October 9, 2018

Daily update 10/9

Bounce attempt failed.

After a small gap down the bulls stepped in to buy.  They got SPX above yesterday's high, but the sellers showed up and took it back red.  Breadth was -51%.  New highs were 44.  New lows slipped to 238.  SPX closed right at the 50 SMA.

The futures are up slightly from the 4 PM close.  The last five bars on this chart closed in a tight range.  The lower tails indicate support down below.  Today left an upper tail indicating resistance.  A consolidation is forming, but which way will it break?

The red count ticked up, but remains below oversold levels.  The intermediate indicator keeps creeping towards 50.

With the lower tails of the last three days I thought the sellers would hold off and let SPX bounce today.  Clearly that did not happen.  This is the problem when we don't get a good selling climax.  It is impossible to tell if the sellers are running out of ammo or not.  The market may make another attempt to rally off of clear support here and the sellers may come out and sell it again.  I don't see any sign of panic selling, but the market feels heavy.  QQQ has been relatively weak, but it was actually up today.  I have no way of knowing how strong the support is at the Jan. high.  Will it be enough to soak up all the selling?  I am sure the selling urgency will pick up on a solid break below the recent lows.  Probably all the way down to strong support at 2800.  I don't know if we will have any significant bounce from here or not.  Today's failure does not rule that out, but it did not help the bounce case.


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