I removed the inverse head and shoulder pattern since today messed that up. Four days in a row SPX has changed directions. Today was just like Thursday. SPX probed lower in the morning then reversed higher in the afternoon. That day did not take out the Wed. high and today did not take out the Friday high. A lot of today's bounce happened late in the day when there was some news about a possible end to the Greek debt standoff. Is that yet another news move that gets wiped out? The breadth was 69% positive which is quite strong, but was greatly aided by the news. It was only 59% positive before the news hit. There were 180 new highs and 76 new lows. That is the first time new highs were under 200 since 1/20. If the numbers keep falling then the bears would be getting a better grip on the market. Lets look at the futures.
The futures probed down to test the 1/16 overnight low. The dip buyers showed up to defend the market once again. We ended the day right at the 18 and 50 SMAs. That is a place where sellers could show up. The bulls need to push price above the 100 SMA and keep it there to get out of trouble.
Will we reverse down again tomorrow or will the bulls show up two days in a row? The sellers have been showing up on upside gap openings on a regular basis. I don't see anything that says the selling is exhausted. I don't think I will be in any hurry to buy a gap up tomorrow. It is pretty obvious the bulls are defending SPX 2000 very vigorously. However, they have not been able to engineer a long lasting rally. Every time the market gets up off the floor the sellers show up again. The market is not oversold in the short term on any measure I use. That probably means there is not a lot of impetus for bulls to buy except for the possible support area. Since we are doing so much downside testing that support is not looking particularly strong to me. Maybe this rally attempt will be the charm and maybe the sellers kill it yet again. One look at the daily chart tells me not to try to predict what will happen. There is clearly a major battle raging between the bulls and the bears. The short term trends remain down for now. The burden of proof is on the bulls.
Bob
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