Economic Reports Due Out (Times are EST): None
The Breakdown:
- Futures are slightly lower prior to the open.
- Asia was up about 1.3%, while Europe is currently trading about 1% lower.
- Friday’s rally, helped to recover most of Wednesday’s sell-off, and is poised to test the 200-day MA and H&S neck line.
- S&P, Nasdaq, and Dow all continue to trade in a tightening range – in the form of a triangle.
- Best approach for staging new positions on more than just a day-trade, is to wait for a break out of the triangle price pattern.
- In the very short-term, we’ve managed to work off the overbought nature of the market.
- Intermediate and long-term, we are still overbought.
- Likely will see a 10-20 day MA negative crossover. Last time this happened (back on 9/20) we saw a significant amount of selling that ensued over the next couple of weeks.
- Volume was the lightest since July on Friday.
- Even if this market decides to continue marching lower, you can expect a ton of rallies throughout, before it gets to where its going to settle. If you can stomach those rallies…fine. If not, you need to become a pro at consistently covering in weakness.
- Worth noting as well, is the obvious head and shoulders pattern forming on the weekly chart. Should this be the case, I’d expect then that this market is reaching a short-term top very fast.
- Volume continues to dry up, and bulls seem to be losing their steam in terms of aggressively buying this market.
- Make sure that whatever you do, that you protect the gains that you have, and be ready for sudden and quick reversals in this market.
- My Conclusion: From the broader perspective I remain fairly bearish on this market, and believe that the rips should be sold going forward. A move back above 1277 would be a major victory for the bulls though.
