The market gapped higher as the rest of the world was positive overnight. Shortly after the open the sellers came out once again. The dip buyers came to the rescue on more FED comments about a pause in rate hikes. However, the sellers came out again at times in the afternoon, but not too much selling pressure. More like hitting the bids and easing off when the market started to go down. Breadth was +65%. New highs were 11. New lows were 10. Calm in the new highs and lows data.
The futures just touched the 100 SMA when the afternoon sellers started to work. This also corresponds with the intraday 60 minute 200 SMA. Some resistance here on top of the overall topping pattern resistance in SPX. The futures are down a few points in after hours trading. Hard to say where they will be in the morning.
The McClellan oscillator is in an extreme overbought condition. Some technicians will think this is initiation of a new leg up. The problem is bear markets usually have very strong breadth on the bounces as people rush in to buy what they think is the bottom. I believe this will prove to be a bear market bounce as the VIX closed below 20 today and SPX is still well below the 200 DMA. In higher volatility regimes the VIX stays predominantly above 20 and dips below that level often prove to be good sell signals. It is now time to watch close as the market might roll over here. I suspect there is considerable overhead resistance from the Dec. break down. If the market starts down again don't be surprised if it does so sharply. The sellers may come out of the woodwork again.
Bob
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