The cash SP500 has continued to struggle higher over the past two sessions. The low last Thursday was above the risk level (horizontal dashed cyan line at 1254.24) of the recently completed daily buy setup where we had bullish divergence between price and the technical indicators I track.
The bounce from the low has been less than impressive. After a qualified break of the Supply line (dashed red line) on Friday the market backed off and closed below it; which is weak price action. Not to be deterred the bulls opened the market back above the line yesterday (a qualified break) and this time were able to close above it - a better sign of strength. The calculated target of this supply line break is 1295.31 and is indicated on the chart. To reach that target the bulls must first clear the short (red) moving average which will be at about yesterday's high today. Let's see if we get any follow through to the upside today.
Bottom Line: The allocation mix meter is at +50%. My near term scenario assumes that an intermediate term low will be made above the March low and that a rally will then take us back above the 1344 level. However; I remain quite concerned that the high may already be in for the rally from the 2009 low. Any break below the March low of 1249.05 will cause me to lighten my position even further as the allocation meter would fall to +25%.
1 comment:
Saxby, I agree with your caution here. I suspect that Daily Set Up which highly likely portends a Countdown has caught the eye of many institutions and they will be very cautious about buying until it's over with. The volume is quite low. The Countdown may end up playing out in a sideways chop, but unless something can engender buying this may be slow going for a bit.
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