Saved by the bell?
How did you like the close at 1041, just about the level everybody’s watching?
I posted intraday and said:
“And here we are again, testing 1040.
Everybody and their dog are watching this level as if it is the border between heaven and hell.”
“Today's breadth is absolutely horrendous and that may help the bulls hold 1040 again due to market being oversold.”
Seems like it was not a bad call for the moment
It was very ugly day. It exerted more damage to the charts that I watch.
This is a weekly chart
We are at 1040 support but index is now below the lower blue line of the channel that had served me so well. Index failed to get above all of the MAs, and now it looks like the MAs are rolling over with the index below them. That said, bears have to take this below 1040 and keep it there to force as many long positions to give up as possible. The week is not over, but so far, it does not look very bull friendly.
We had picked a couple of clues: the failure to get above MAs and the RSI. On June 22, I said:
“Notice that RSI made a turn down halfway. I am not trying to read too much into it but slack momentum coming out of deeply oversold levels is not a typical sign of a raging bull.”
Now RSI is back to oversold threshold and, in addition, MACD is negative. These, of course, will not mean much unless bears break 1040 for good and turn it from support to resistance
This is a daily chart
We are at the bottom of the 1040-1100 box. The break out of the box to the upside was either fake or premature. We got our bearings right in time from a failure of the index at 55 EMA and at the underside of the dashed purple line. Can this now be a double (or triple) bottom around 1040? Anything is possible, and from the point of view of 1040 being a pivotal area, it may be a well-calculated, low-risk trade on the long side. So, for a lopsided casino crapshoot (some may call it calculated risk) at picking a bounce or a super lucky bottom, 1040 is the number to pull on the pit boss. That being said, there is a lot of overhead pressure, and the technicals, across multiple time frames, do not look very promising at this point. Bulls need to get above 1070 and stay there for a start. If I wanted to do the crapshoot, I would probably look at options.
For the day, volume expanded. Daily breadth was horrendous
In the same post of June 22, I said:
“Bulls wouldn’t not want a rolling A/D line. Bulls would not want a collapsing NYHL either.”
So far, bulls have done nothing to improve A/D and NYHL.
McClellan group of oscillators are all in negative territory, but there seems to be some positive divergences being built
Also, short term breadth seems to be oversold
Perhaps a bit too early to read much into divergences of McClellan Oscillators of the above chart. Bulls need to show up, and get above 1070, and then 1090. Still, holding 1040 and having some oversold and diverging breadth conditions may be good enough for a bounce to at least test 1070 – the key is holding 1040.
Short term stuff aside, broader view of breadth looks very dismal at this point
Urgent action (money on the bid side of the tape) is needed by the bulls
This is a 60-min chart
Let’s just simply say that bulls need to get above 1070 and stay there to deserve any attention. Bears need to break 1040.
OEW pivot support at 1041 and 1032. Pivot resistance at 1058 and 1090
Long term trend is up. Mid-term trend is down. Short term trend is down.
Have a Nice Day!
S&P 500 – May 15, 2012 - Bottom Line: Long term trend is up. Mid-term trend is down. Short-term trend is down Weekly S&P stage is Late Advance (2-C) Daily S&P stage is Strong Decli...
1 year ago