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Market Comments for January 14, 2015

 

Yesterday the market gapped up a significant amount and rallied very strong during the first 30 minutes of the day to set the high of the day at the 10.00 reversal time. It consolidated sideways going into lunch and then began to break down. A controlled pullback occurred until the 1.30 reversal time, when the market accelerated sharply to the downside and closed weak leaving another red bar on the daily chart. The SPY was the same.

The same issue remains as prices are still operating within a wide range of daily support and resistance, but this is likely a spot of last resort for the Bulls. The Bulls lost a big battle yesterday as prices gapped and rallied then completely sold off leaving an outside bar that broke above the prior day’s high but yet ended up breaking the prior day’s low. We have discussed the fact that the daily charts are likely in a stage III type of environment which means a lot of sloppiness can occur between support and resistance without consequence. That’s why the support level around or just below 100 on the QQQ is a critical one since prices are still above that, the daily chart still looks sideways. The intraday chart the looks like prices want to come down to retest that area again as every rally has been sold. The intraday chart is a bit oversold going to its morning so if a morning consolidation cannot catch a rally, it is likely the intraday stage IV will continue.