SPX tested considerably lower, but dip buyers seemed to be buying on the way down this morning. The volume was very good today. Breadth was +54%. New highs slipped again to 19. New lows popped up to 230.
The bars on the futures chart show several lower tails. Somebody was stepping in to do some buying. The last bar is a big bullish engulfing candlestick with a close back above the 50 SMA.
Both counts fell today. The red count is still over the green line, but if the bulls generate a positive cross this will count as a bounce cross. With the lines this close together that would be easy to do if the bulls come out to play again.
The bulls clearly are defending the market in this area. That might be due to the SPY option support which will go away tomorrow. On the other hand, it could be real and the market is getting ready to bounce again. I was favoring the scenario where SPX gets very close or touches the 50 DMA then the real retest of the low. That is the way it most often plays out. If the market does bounce from here then it might make it to the 50 DMA. That is if the 200 DMA does not stop it. Breaking today's low could lead to a mini cascade down to the Oct. low.
Bob
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