SPX closed at the lower red channel line again. It seems to refuse to get clearly back into it. At the same time it has not been rejected either. Price is still extended from the 18 SMA. In other words the song remains the same. The question now is will the selling in technology continue and will it spread to other things. Tech is an important sector. If the selling continues I am sure it will spread. There are a lot of high profile tech companies reporting next week including AAPL.
The financials report early and have been supplying the bulk of the earnings growth (thank you FED) for SPX for a few quarters now. A lot of companies that have reported have beaten lowered earnings expectations, but revenue is another story. Will people continue to bid up stock prices from here if revenue continues to disappoint?
SPX closed about 5 points above the May high. However, it did not do it on a thrust. It was more of a slow creep up. There were only 253 new highs. I see the market clearly very over bought without any clear sign price will hold above the May high going forward. This still looks like a probable double top to me, but it would take a close below 1687 to give us any indication I might be right.
I heard somebody talking about a melt up in the market next week now that we are above the May high. I think a little perspective might be in order. Here is the SPX monthly chart.
SPX is above the upper monthly Bollinger band and is right at the trend line formed from the last two peaks. On top of that it is summer. With the market stretched in the short term and the long term do you think there are high odds of a melt up from here?
Chart practice has been updated with EW the stock tonight.
http://traderbob58-chart-practice.blogspot.com/
The market and sector status pages have also been updated.
Have a great weekend all.
Bob
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