SPX was pretty choppy as small waves of buying and selling hit the market. At the end of the day the breadth was slightly negative. New highs picked up a bit to 36, but remain low. New lows also picked up a bit to 26. The oddest thing today was the VIX dropping 3%. Its now down to 21.64. Still room down to 20.
The futures show a slight downward drift. Just a little profit taking so far. Will it turn into serious profit taking or will the bulls come back?
I have seen a number of people trying to compare this bottom with the bottom that formed last fall. We have a completely different price and volume pattern here. Last Aug. we had a clear volume climax low. We don't have that now. We had down days will elevated volume, but the closes were well off the lows. Instead of climax selling this pattern suggests bulls stepping in at lows and buying. That is how the market made a short term bottom pretty often in the last bull market. We really did not see that much at all in the recent bull market. In an uptrend this would be a perfectly fine bottom. However, we made new lows more then 6 months from the top and trend measures all agree on a downtrend in the big picture. Longer lasting lows in a downtrend tend to come from selling climaxes. I don't think we have that. While the market may climb higher it could also easily roll over again. Tricky.
Bob
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