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Monday, September 8, 2014

Daily updatre 9/8

The consolidation phase continues.  The bulls did not show up today to capitalize on Friday's strength.  Here is the daily SPX chart.

We had a slight gap down this morning which a few dip buyers came in on.  However, as soon as price got up around yesterday's high sellers showed up and took SPX back down to 1995.  Buyers showed up there and pushed price back slightly above 2000.  We still have sellers above 2005 apparently.  Until the bulls decide to over power them or they run out of ammo we aren't going significantly higher.  Lets take a look at the futures chart.

We can see there was absolutely no follow through from the bounce off the 50 SMA on Friday.  Today's price range was completely contained inside Friday's last bar.  The market is struggling to decide what to do.  In Sept. we have tried to go up and down and failed in both directions.  Are we getting close to resolution?  Lets take a look at IWM again.

IWM was up slightly today despite SPX being down.  However, it is still below the .618 retrace line.  The bulls need to get going here pretty soon.  This is starting to look a bit like a possible head and shoulder top over the last two weeks.  Since we know the market can't go down that was probably a stupid observation.  Why waste time even thinking about a possible top pattern?

We have had one positive breadth day out of the last five trading days.  That is distribution going on, but the market still has not broken down.  I have seen a number of articles mentioning how positive the news flow has been lately.  Still we do not go up.  What exactly is the market looking for?

This is a rather odd situation.  SPX has bounced off its 100 DMA 6 times now and ran right back up to new highs.  I first wrote about this pattern last year after the first 3 bounces.  This is one of the few times any pattern I wrote about kept happening.  This obviously has to be very widely known by now.  How many more times will it work?  This is the first time IWM did not join the new high party with SPX.   My guess is if we roll over here this will be the time it does not work.  What happens the first time it does not work will be interesting to watch. 


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