$SOX Index dropped 8.28pts & 2.11% on Friday. TXN took a 1.32% haircut but WFR, after being pumped to the moon on Wednesday & Thursday, dropped 9.78%. $SOX weekly chart printed a bearish shooting star, which has a low reliability so it needs to be confirmed with a close next week below this week’s low of 376.55. $SOX has been under performing lately so there is a chance it will give a ‘sell’ signal next week in weekly time frame.
Zweig Breadth Thrust and 4wk New High/Low Ratio have rolled over, which is good thing. Otherwise the market was heading for a short term top of one degree or another. If these had reached extreme overbought levels on Wednesday or Thursday then I’d be more concerned about the sell off that happened on Friday. Don’t get me wrong. I am concerned about Friday’s action but just not mega concerned. Pretty obvious that some Phantoms of Wall Street stepped up to the plate a little after 1:00 P.M. to defend price and squeeze all the shorts who were certain that Armageddon had at last arrived. As long as those mad men at the helm keep doing their part, then longs have absolutely nothing to worry about unless, of course, you’re a skittish hyper paranoid trader like me.
60min chart of SPY on which I have drawn a rising price channel. What I’ve done to create this channel is draw the upper trend line, then I’ve cloned it and created the lower trend line. The break of the light blue trend line may yet prove to be valid but as long as the 13EMA remains above the 34EMA then no ‘sell’ signal in the 60min time frame has been triggered.
Daily chart of $SPX and it looks okay as it remains above all these MA’s and trend lines. Text book Hanging Man Doji after a series of indecision dojis which, at least to me, would give the Hanging Man a bit more significance. But time will tell, especially since we’ve seen these big up gaps on the first trading day of each of the past two weeks.
Note that the upper, red trend line on this daily chart is in about the same place as the lower trend line on the 60min SPY chart.
Weekly $SPX chart showing it moving upward within this wide and purely speculative rising price channel. $SPX pushed to a new rally high this week of 1296.82 and then closed above the previous closing high from 10/28, which was 1285.08. But does this mean that $SPX wants to go higher and that 1300 should give way this next week? Maybe. I’d feel more confident in holding such an expectation if the 26MA would stall and turn up. Until then I’ll continue to bite my nails to the nub.
For the week ahead, I’m going to be watching the 60min charts like a hawk. Weakness in the 60min time frame will doubtless bleed over into the dailies. I still can’t shake the post-MLK decline of 2010 which caught many traders by surprise. Back then it was just Greece that was shaking things up and now its all of Europe. AAPL doesn’t report until the 24th and the anticipation of another blow out quarter could be enough to keep the markets moving up next week, but if AAPL should stumble then look out below, IMHO, of course.
Be careful and GL in the shortened week ahead.