Wednesday, December 10, 2008

12.10.08 - Characteristic Trend Day?

Title Date Fixed
The five-day moving average continues its upward path and has really come up to meet current price. Note how Advancing Volume has continuously widened its spread over Declining Volume, Cumulative Tick is very positive, the Advance-Decline line indicates strong breadth, and we have continually pushed past resistive volume spikes. As I write this, however, we've seen a couple big down bars. If this is indeed a trend day, the market should find support at the rising VWAP, Pivot, or Five-Day Moving Average, successively. So watch closely whether or not these hold.

Separately, I hope this automotive "bridge" doesn't become "The TARP Vote" -- Part Tres. Remember the first attempt on that? For now, let's see if this rally can hold up as the tick just now shows signs of a possible fade.

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10:50AM PST - Back into the range and under the 5-day moving average. Daily gap is now closed and we are trending down.

11:40AM PST - Volume picked up at yesterday's lows and we found some support. Downward VWAP may now prove resistance on any recovery attempt.

12:30PM PST - The market held at yesterday's lows and has been recovering with a series of higher highs and lows. At potential resistance just now, but signs of busting through. Choppy yet resilient day overall with something for every type of trader.

Close - I thought we might see a touch more pull-back today, but the market has really caught up with itself through time here, allowing marginally overbought conditions to mostly work themselves out sans a large corrective volatility reaction as we've become accustomed to. If we do see some more downside range (add: still likely), I'd expect strong support between SPY $86-88. Either way, as we head into the end of the year I'd say short-biased traders should consider this recent action carefully.

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