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Thursday, January 17, 2019

Daily update 1/17 The bullish take and the bearish take

Another gap down and another round of dip buyers snapping up the bargains.

Thanks to an afternoon headline that the U.S. might consider lowering tariffs on China SPX closed above the 50 SMA.  From the article I saw I believe this to be a bogus headline, but we will see.  Breadth was +67%.  New highs were 19.  New lows came in at 12.  Nothing telling in the internals.

The futures made it up to the 200 EMA.  It is still another 20 points to the 200 SMA.  If we get that far it is highly likely to be very strong resistance.

We keep having downside gaps, but so far sellers have not been interested in selling into weakness.  There have been a few intraday spikes down, but no sustained selling.  The other night I talked about the equal and opposite reaction going on in the market. The last flush started on 12/14.  The high that day was 2635.  That was today's close after the market gave up 10 points of the headline surge.  The flush is completely retraced now.  Between that and closing above the 50 DMA there is likely to be some selling soon.  There is also the bigger picture resistance from the top SPX broke down from in Dec.  We have now returned to the scene of the crime and there may be more investors interested in getting out now that they are back to even.  The odds of a retest of the low are extremely high and this seems like a good place for the rally to fizzle out.  Time to start watching for a roll over.

Interesting couple of articles looking at the market action and getting completely different ideas of what is going on.  I suggest reading both.

Bull take
Bear take


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