SPX broke briefly below the 200 SMA today. The dip buyers came in and caused a massive short covering rally. The breadth was +54% which was quite weak with SPX up .61%. Most of the money must have been going into the biggest of the big cap stocks. The new highs were 47 while new lows were 305. While the price pattern looks reasonable for a short term bottom the bulls still need to see upside follow through.
As I write this the futures have taken a bit of a tumble after hours. They briefly dropped out of the rectangle this morning, but could not stay there. Can the bulls get them out the top? We have had three green bars during this consolidation and each one was met with more selling. The consolidation continues for now.
I think today's rebound was technical in nature. Sometimes those turn out to be short term turning points and sometimes they don't. To turn bullish again I want to see a breakout of the top of the rectangle on the futures.
Earnings start to trickle in after the close tomorrow. Will companies beat the lowered expectations? If they do, will it be enough to drive prices significantly higher? Is the Greece saga or the amazing crashing Chinese market going to take SPX down? I got questions, but no answers. We are going to have to wait and see what happens.
Bob
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