Stock Market Technical Analysis Blog
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In the market today we saw the first oversold bounce since the S&P peaked by losing a four week struggle at the 1850 resistance level. While it was nice to see the market climb instead of just gapping up huge this morning we really needed to get a little higher to shoulder some of the burden of producing lift tomorrow.
Looking at the charts:
- Chart 1: showing the trade entry EMAs improved today on the stock indexes but they really needed to climb higher in the afternoon instead of leveling out.
- Chart 2: the nasdaq, was bounced today from its lower mid term channel line.
- Chart 3: the S&P, we see that Bernanke's last line of defense, the 108 EMA was lost yesterday causing the huge sell off. We are now holding at the lower line of the short term channel that I inlaid with a small chart. You can also see the position trade set up - a layup of the red/green position trade EMAs which is bullish but we really needed the S&P to climb into the bell which would have started the small red EMA to lift. With the red going into the green line at this steep of an angle it's going to take one massive pullup effort over the next two days to both keep from losing the lower trendline and to force the red to start lifting up from the green line instead of piercing down thru it. It can be done and has been done many times but with the way the market levelled out in the afternoon there is now no room for error.
- Chart 4: Same situation on the DOW, in the inlaid chart, the smaller red EMA is coming in really steep and didn't get any help from the afternoon trading.
This morning's trading was encouraging considering the principal driving force in the market has been replaced with a new chief. The afternoon trading, however, raises concerns for the next couple of days. If the red crosses down thru the green in the small inlaid chart on big chart number 3 of the S&P, the lower short term channel lines will not likely hold the market by themselves. This will be a really close one.
Trade well my friends
Alan
