The day started with a big gap down, but the dip buyers rushed right in again. However, the market found its high mid day and started drifting down a bit in the afternoon. At the end of the day SPX closed above the 50. Will the bulls come out and support the market here? Here is a look at the Russell2000 index.
Unlike SPX this index is still right near its highs. Whatever is causing the pullback in SPX it is not a general fear thing. If that were the case this index would be much lower. I am suspicious it has to do with the upcoming earnings season.
Here is the current breadth chart.
Both breadth indicators had negative crossovers today. The third panel in the chart above is the 10 DMA of the advancing and declining volume. I usually don't talk about this because most of the time they cross with or slightly after the breadth lines. However, in this instance they actually crossed four days ago. That is an indication that there has been significantly more volume in declining stocks then advancing stocks lately. There is definitely some distribution going on in the market.
The daily chart is pretty steeply down on SPX. The market has some work to do to get fully bullish again. At this point I think the bulls need to get back above the hourly 50 SMA on SSO to get control back. Any bounce that fails to do that will likely end up at new lows.
Chart practice has been updated with LULU the stock tonight.
http://traderbob58-chart-practice.blogspot.com/
Bob
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