SPX closed below the July high, but above the May intraday high of 1687. The most striking thing today was that new lows were 165 versus new highs of only 58. So new lows were almost triple the new highs. Considering we closed below the 18 SMA for the first time since crossing above it the first week of July that seems very excessive. Since we are still above the May high and just barely closed under the 18 SMA it would be normal for the bulls to mount an attack tomorrow. If we do get a bounce we will have to see what the quality of it is. I suspect it would be a bounce to sell. If we continue down tomorrow I think it would be the first time we will have had four down days in a row all year.
With the negative breadth readings at all time highs and this many new lows so soon I think the bears are in control. Be careful about getting too excited about a bounce here. I suspect the bears will be back at some point when they get higher prices to sell into. Especially if new highs stay below the number of new lows.
Check out the TLT chart.
TLT rallied again today and is back above the 7/5 spike down low. It spent a few days probing lower, but did not collapse. This looks like a pretty good attempt at making a double bottom here. It still needs to follow through some more. I think a rally in bonds will be negative for stocks, but we will have to wait and see. First lets see if TLT really has bottomed.
Bob
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