SPX closed above 1700 and in the retrace resistance zone. This now qualifies as a retest of the Sept. high. The yellow arrows mark the days SPX crossed over 1700. As you can see we have been here twice before and each time the market went up the next then rolled over. Will that repeat or is this the time 1700 gets conquered? The VIX was rejected at the weekly 200 SMA. The last three times that happened SPX went on to new highs. Will that happen again or will this time be a failure? Lets take a peak at the weekly SPX chart for a change.
When you look at that last bar what do you see? It is both a bullish engulfing bar and a potentially bearish hanging man? Which of those interpretations is going to play out? Here is what we know. Up to this point SPX has had trouble staying above 1700. With each trip to the highs market internals keep getting weaker. The number of stocks above their 200 MAs is very important and continues to diverge. To me the market internals look like a market topping out and not getting ready to race higher. With this being the third trip above 1700 I would expect another failure to have much more selling pressure this time. Now it is up to the bulls here. Will they chase price higher or not?
Chart practice has been updated with WPX the stock tonight.
http://traderbob58-chart-practice.blogspot.com/
The market and sector status pages have been updated as well.
Have a great weekend all,
Bob
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