Daily update 8/14

For the last five days the market consolidated as the bulls tried to push the market higher, but failed.  Since they could not do it during market hours they tried the old overnight gap through resistance trick.  However, it only took five minutes after the open for sellers to make their presence known.  Apparently nobody short wanted to cover on the gap up and nobody came in to add longs.  This is real simple, there are no buyers left at this level.  The odds of a pullback are extremely high.  Here is the daily SPX chart.

This market has exhausted a lot of buying power and flushed out all the shorts.  That usually leaves few buyers in the early stages of a decline.  The choppy nature of this price pattern does not give very good support areas.  I would start with the 18 and 50 SMAs and lower channel and see what develops.

With all the divergences in market internals and major indexes, this looks like a major top.  I am talking along the lines of 2000 and 2007.  Only the technical condition of this market looks weaker to me then either of those tops.  This is exactly what the end of bull markets look like.  Unlike some people, I still am not convinced that bear markets have been eliminated permanently.  This sure looks like one is about to start.

Bob