Good morning. The markets need to decide this morning if they want to move on to 1080 or go and see how firm that bottom was we put in place at 1044.
The world:
Asia
Europe
United States
Economic news
Watch those Jobless claims at 8:30 this morning. They took a jump last week to 480K and another higher number today will start a trend higher. That 500K number would be a disaster.
Earnings
Too many to post today:
http://www.briefing.com/generalcontent/investor/active/articlepopup/pagepopup.aspx?pageid=3270
Breadth Charts
40 DMA % Index
The 40 DMA % Index chart scores a -2 today with the curl down of the NYSE from yesterday's action.
10 Day High - Low
This chart also scores a -2 because of the NYSE weakness of the NYSE. The RUT and Nasdaq both put in lower high-low numbers but remained above the bar-5 numbers hence neutral ratings for both.
52 Week New Highs
The 52 week new high chart scores a -1 today. This time it wasn't the NYSE that put in the negative number, it scored a neutral. It was the Nasdaq which scores a -2 for not being able to pass yesterday's count nor the count from 5 days ago. The Rut put in a +1 with a tie between today and day minus 5 and a higher next day bar.
Conclusion
| Chart | Score |
| 40 DMA % Index | -2 |
| 10 Day High - Low | -2 |
| 52 Week New Highs | -1 |
| Total | -5 |
We slipped from a neutral day to a bearish day with yesterday's breadth action. Caution is to be advised from either side here. The way my scoring system is set the charts are setup to move very quickly to the upside here. The bar-5 numbers are very low now so any type of price action improvement should move the scores to the positive side. It is just another way of saying that the charts are very weak and oversold and it will become increasingly difficult to make the charts weaker.
That being said we do have a dangerous head and shoulder pattern forming on the $SPX here.
$SPX
I haven't traced it out, I assume you can all see the formation on the 15 minute chart from Monday's, Tuesday's and Wednesday's action here. That 1060 area is now even more important, a breakdown below 1060 targets the completion of the head and shoulder's pattern down around that 1044 area.
Game plan for the bulls: They played very badly yesterday right out of the gate. We now have a double bottom in place around 1060 and that must be defended. A breakdown as mentioned targets 1044. For their offensive play the bulls need to invalidate the forming pattern by driving prices up and over the 1074 area. Extra credit for getting and closing above 1080. That yellow band at 1085 is still our high warning area so watch out for trouble there if we do go into rally mode today.
Game plan for the bears: Break 1060.
Yesterday was a difficult trading day.. at least for me.. while I did make money it was at the cost of frustration as the markets moved in divergent patterns to my indicators, something that usually only happens around OPEX when there are trading factors beyond normal accumulation and distribution. I think the same thing is happening in here with the dollar trade. Some are trading the dollar off the market move and some are trading the market off the dollar move and there is a pinning action going on.. not sure just my guess. At this point the correlation and causality are getting mixed up.. is the dollar leading the markets or the markets leading the dollar? Regardless, I just wanted to warn you that the markets for the last couple of days have not traded with my indicators the way they have in the past so beware.
- Marlin aka RedlionTrader
