SPX got a little above the lower red channel line yesterday, but closed back below it today. Volume increased a little bit, but nothing dramatic. There were no takers this morning as SPX got almost to 1700. The buy the dip crowd came out after the morning sell off, but were thwarted late in the day as the market sold off again. I believe that sell off can be explained by the Nova/Ursa ratio chart.
The ratio went negative today as people pulled money out of the bull fund. It is likely the peak of the current inflow is now behind us. The question is will people continue to pull money out. Another negative reading tomorrow could signal we have a short term top in place. However, every other down day this month (all two of them) was met with buying the next day. Will that pattern continue or will the profit takers win the day? The key for SPX is still the May high of 1687. A close below that and we have a failed break out situation and the possibility of increased selling pressure.
Bob
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