Everybody is sitting around waiting for somebody else to buy or sell first. Another 5 point range day. We tested yesterday's high several times early this morning, but found no takers. Are there any buyers left out there? Lets look at the futures chart.
The futures closed below the 6 SMA for the first time since 6/16. We have lost some momentum now. Can the bulls get it back? We are still a long ways away from the 100 SMA which makes us still quite over bought. The last pullback did not go very far so it did not get the market in a short term oversold condition. That can tend to limit the upside fuel. The futures are down a bit as I write this, but who knows where they will be in the morning. If we get a confirmed break of the 6 SMA it would change the short term trend to neutral. After three days of very narrow range at the top a range expansion on the down side could bring out some sellers this time. Lets take a look at the breadth chart.
This last spurt to the upside did not come with a surge in breadth. The McClellan oscillator is barely positive and the 10 DMA breadth lines are working towards a negative cross. This looks like an exhausted market just as the price bars suggest. Notice the 10 DMA advancing volume never did show the same kind of strength seen on other rallies in this bull market. I could be wrong, but that seems to suggest the big boys were not piling in on this rally.
If we should pullback here the first support is the last swing low at 1925. The next level down is the 1897-1902 area. The market is now ripe for a pullback. Will the bears pounce or stay in their caves?
Bob
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