Wednesday, May 29, 2013

SPX Daily Chart Channels

Yesterday's candlestick shows how price ran higher early in the day only to retreat with the close below the halfway point of the candle, typically a bearish indication like the outside reversal day last Wednesday. On the bull side, the Thursday and Friday candlesticks show how price finished higher after spending much of the day lower creating inverted hammers. The thin blue circle did turn out to be a tweezer bottom and the CPC above 1.2 and NYMO at -40 both helped to create the bounce. The erratic action indicates that markets are at an inflection trying to make a firm directional decision but is torn between which way to go.

The stronger volume days remain in place on the sell days while weaker volume occurs on the up days. Distribution is in play again after taking a short hiatus in late April and early May. A proper test of the 20-day MA at 1637.03 has not yet occurred and should be expected moving forward. Watch to see if the stochastics lose the 50% level to indicate price weakness ahead. The 1634-1650 area may see a lot of price action over the next couple days. The brown channels at 1540-1598 and 1634-1669 encompass nearly all the price moves over the last three months. The 1649-1650 level is key and will indicate which side is winning.  Key S/R is 1687, 1669, 1666, 1649-1650 and 1634. This information is for educational and entertainment purposes only.  Do not invest based on anything you read or view here.  Consult your financial advisor before making any investment decision.

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