Think outside the box.. $SPX 1092/93 and 1108

Good morning.

This morning as I sip my coffee and write my blog we are sitting with a -4 point handicap on the markets.  ES, the S&P futures, seems to have found a temporary bottom at 1090 having bounced there 3x times now.  Yesterday we stayed within the confines of our fence for the bull vs. bear cage fight, pinned in between the SPX 200 DMA and 1092/93. Wez gotz plenty of news this morning to move the markets. Premarket we have  GDP at 8:30am (EST) and at 9:45 we get Chicago PMI and then at that trade tripping time of 9:55 we get to find out how our Michigan brethren and sisters feel about the consuming.  Could be a whippy day.


Quote of the day:
Be who you are and say what you feel, because those who mind don’t matter and those who matter don’t mind. – Dr. Seuss

 

Chart

Score

 Day-1

Change

40 DPI

+4

0

+4

52 WNH

+0

-4

0

10 DHL

-4

-2

+2

Total

0

-6

+6

 

We actually gained some breadth on Thursday to pull the score from bearish to neutral.  I was expecting more upside yesterday, or at least a hold,  but the markets did not produce.   I enter today cautiously.  We have put in three red bars on SPX and we don’t usually reverse that with an expansion bar like we produced yesterday so I expect one more day at least of weakness.

 

Our 40 DPI is still on the bull side and tells us that this 3 day correction is still within the window of a bull run so we keep looking up and for signs a reversal is imminent into that direction.  52 Week new highs  were producing better yesterday than Wednesday and not just because of the gap open.  There was strength in the afternoon also. Nasdaq 52 week new highs actually produced a bull signal on the close.

 

10 Day high minus low charts were very close to a neutral signal.  We do see some gathering strength but maybe not enough to propel us through the 200 DMA yet.

 

$SPX chart:

 

We stayed within the box we setup from Thursday hitting that 1116 which represented a lot of things such as the 200 DMA and a trading top.  There were sellers wanting to leave and just not enough buyers around (must be on vacation) and sell we did breaking the 1108 gap test we setup on Thursday and  then the bears showed no respect for the bottom of my trading range at 1102 and we fell right down to the bears goal line of 1093 were we bottomed had a nice rally into the afternoon and watched more profit taking into the close. Not exactly the day I had envisioned but still behaved well.

 

Today.  I would expect some more correction.  Perhaps an NR7 type bottoming day between 1102 and 1092.   I do expect that going into August we will resume going back up but we are might just need one more day of digestion.   Of course I have a very high probability of being wrong so we need to plant markers.    The obvious markers remain 1116 and 1092.   A break of either of those and the appropriate furry mammal is in control.    Bulls would like to turn this around and resume making higher lows and highs.  A good place to start for the bulls would be the defense of 1096/97 and then a run at 1108 and a break there.  For the bears, defend 1108 and break 1092/93.  If we do break 1092/93 watch 1089 and 1081.    I think the upside is covered for today.

 

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