Today was a doji candle and an inside day. The market is showing indecision at major resistance. How much longer is it going to take to resolve this? We are still extended from the 18 SMA so we are still short term over bought. The 18 MA is still below the 50. Not much new here. Lets zoom in to the SPY 60 minute chart.
Today SPY made a double bottom right at the 50 SMA. Will this launch us to the upside tomorrow or will it end up breaking down through the MA? I think we have done enough testing here that a downside break of the 50 SMA will initiate a pullback.
The bears were unable to capitalize on yesterday's failed break out. At the same time the bulls were unable to take advantage of the moves above 1850. We might need a catalyst to break the stalemate.
The trouble with the upside break out is the market will still be short term overbought. That may make people hesitant to buy in. A new closing high that fails could provide a sell catalyst. An upside break out needs to hold long enough for both the Dow and the transports to get to new highs.
TLT had a good day today and looks to be resuming its rally. Will stocks be able to rally along with bonds?
Bob
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