Summary: A Bounce?

 

Good Morning.  I am thankful this morning for a great weekend with friends and family who gathered for celebrating another year of the great experiment.  I am also thankful that I waited until the morning to write up my summary based on the breadth and price charts.  Last night the markets looked a little different.

 

This morning we find ourselves building a positive  gap of about 13 SPX points as I write this piece.   That is only about half the story though.  Over night the ES futures tested the 1000 area (hit 1002.75) and we have since journeyed up about 24 points to our current 1025 (if you caught that run congratulations!).

 

So today we see how bad a squeeze we can make and how short the market was.  I suspect that most of the shorts had left the oversold market so we need to watch the gap for strength, it might not materialize.

 

Quote of the day:
It is a far, far better thing to have a firm anchor in nonsense than to put out on the troubled sea of thought. – John Kenneth Galbraith

 

Chart

Score

 Day-1

Change

40 DPI

-4

-6

+2

52 WNH

-4

-0

-4

10 DHL

+2

-6

+8

Total

-6

-12

+6

Breadth wise we gain a little on the bullish side moving +6 in the positive direction based on Friday’s market.  The close was quiet disappointing as investors went seeking exits before they hit the road on the long weekend.

 

Price wise we ended up with an inside day (that is a day where neither the high or the low of the day were greater than the previous day) yielding another sideways consolidation which in the short term past has been the precursor to another selloff.  A rally today that holds will be a change for the market.

 

$SPX chart:

 

The nice thing about the bounce this morning is that I don’t have to redo my charts.  I can focus on the upside today and leave that 1012 area as a do not cross bottom.  If we can bounce here I am looking to reach the 1071.50 area in the next few days before making a go – no go higher decision.  That is about 6% up from here.

 

Today for the bulls to gain respect they will need to hold the gap and get up and over that 1040 level.  That is still another 9 ES points above where we are now in the gap (up 15).  The bulls need to show some strength to shakeout the bears and to bring in the buyers.  So to some it up we are going to need one of those 250+ point DOW days.image

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