- WE'RE JUST RANDOM SPECKS OF DUST IN A TORNADO TO THE MARKETS .......
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Wednesday, 2 July 2014

Q3 Day 2 - Bearish

Unlike the bears last week, the bulls took full advantage of a favorable day yesterday and made an impressive new high. My primary channel resistance on the weekly chart isn't yet broken with any conviction, and yesterday closed back on it, but it's in trouble, and I'm upgrading the odds that we will see a further break above to 70%. Here's the chart I posted intraday on twitter yesterday. SPX weekly chart:
SPX pulled back a bit at the close yesterday to close on the daily upper band. We may be seeing the start of a ride of the daily upper band. We could see a retracement day today without that being an issue, but if so I'd expect a return to at least touch the upper band again tomorrow. SPX daily chart:
There is really nothing to suggest that yesterday's high might be significant on the 60min chart. However there is obvious very strong support below at 1961 at broken rising wedge resistance and the 50 hour MA. As long as that holds I'll be assuming that this move up is ongoing. If it breaks then I'll look again. It was the bears' failure to hold below the 50 hour MA last week that signalled the failure of that move down. At break below that here would send a similar signal about this push up. SPX 60min chart:
NDX reversed at rising channel resistance yesterday, though unless we see SPX break below the 50 hour MA, I'm not looking for a test of channel support. If this channel breaks up then I'll be looking for a hit of megaphone resistance in the 3975-4000 area. NDX 60min chart:
I've been checking up on that stat I mentioned yesterday about 1928 but can't talk about that today as I'm out of time. I'll look at that tomorrow morning. What I have for today are the stats for the second trading day in July. I've had a look back over the last ten years of these and the takeaways are as follows:

  • Six red closes, one flat, three green closes
  • Distribution: -27, -23, -10, -5, -3, -2, flat, +5, +9, +10
  • There were three previous green closes with unfilled gaps, the following days closed -27, flat, +5 - two of these filled the previous day's gap intraday. 
I'm leaning bearish today, and we could see a fill of yesterday's gap intraday, though I'd give the odds of that at no more than a third. The 50 hour MA on SPX is a must hold level and a decent break below would be a big warning signal to bulls here. After the retracement the stats for tomorrow lean bullish and I'll be going through those tomorrow morning.

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