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Friday, September 5, 2014

Daily update 9/5

The bulls strike back as SPX closes at a new high.  It did not manage to make a new intraday high though.  Here is the chart.

SPX tested the key 1991 level twice this morning before rebounding the rest of the day.  Was that a big enough dip to get people to chase price at new highs?  Breadth was 59% positive and there were only 105 new highs (33 in SPX).   Those numbers indicate a lack of enthusiasm by the bulls today.  Lets see what the futures chart looks like.

That last bar shows a pretty strong bounce off the 50 SMA. The bulls need follow through on the upside to end the consolidation/pullback phase.  Lets have a look at the IWM chart.

IWM bounced off the 18 SMA.  It is showing clear relative weakness to SPX.  This is the first time in this bull market that SPX has been at bull market highs this long that IWM did not make a new high.  So far it has not been able to get above the key .618-.786 retrace zone.  I still think it is going to have to do that to keep SPX going up. 

SPX ended the week in the area where the sellers were waiting the last two days.  Do the bears strike again next week?  Will bulls capitalize on today's bounce and push prices clearly through resistance?  It seems to me there has been plenty of good news lately while the market has been struggling with resistance.  I am not exactly sure what the market wants to see to go higher.  We have tested 1991 on multiple days so it has been validated as an important level.  The bears need to see a break down below there to begin to take control.  In the mean time the current consolidation could be either a top or just a pause before going higher.  We are in wait and see mode.  Just realize the market internals are weak.  If this turns out to be a top I would expect we will get a bigger pullback then we have been seeing lately.

The market and sector status pages have been updated.  Have a great weekend.


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The information in this blog is provided for educational purposes only and is not to be construed as investment advice.