The bulls met their match yesterday as the cash S&P500 formed a downtrending day. This move down was sufficient to cause the August 11 high of 1313.15 to become a CIT (Change-In-Trend). One bit of information that points to a pullback rather than a new bull leg is that volume decreased yesterday. Additionally the weekly chart is on a "buy" signal and the 1313 high was only minor resistance on that chart.
Of the two short-term scenarios laid out yesterday the market has chosen the bearish alternative. In this situation I see the immediate decline ending very quickly and holding above the July 28 low of 1234. Today’s chart shows support right under the market at 1274 and then at 1262-1266 and then 1249-1250. We should see a bounce higher beginning over the next day or so that again tries to surpass 1313. It will be the character of this bounce that tells us much about how weak the market is or is not becoming here.
The Wilder Directional Movement System remains long from 1297.85 but will go neutral on any move today below yesterdays low. Meanwhile the Parabolic SAR was breached and is now above the market at 1312.38. The price drop yesterday put my under-development trading system in a short position from 1276.84. A move today above the Resistance line at 1309.06 and SAR would switch me to long.
Of the two short-term scenarios laid out yesterday the market has chosen the bearish alternative. In this situation I see the immediate decline ending very quickly and holding above the July 28 low of 1234. Today’s chart shows support right under the market at 1274 and then at 1262-1266 and then 1249-1250. We should see a bounce higher beginning over the next day or so that again tries to surpass 1313. It will be the character of this bounce that tells us much about how weak the market is or is not becoming here.
The Wilder Directional Movement System remains long from 1297.85 but will go neutral on any move today below yesterdays low. Meanwhile the Parabolic SAR was breached and is now above the market at 1312.38. The price drop yesterday put my under-development trading system in a short position from 1276.84. A move today above the Resistance line at 1309.06 and SAR would switch me to long.
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