This rally as certainly hit a pause here. Is it a sign of weakness or a pause for another push up? There is a lot of sentiment and breadth behind the current market. We need to watch for those to wane before we throw in the towel. Bears might be encouraged to jump in only to get run over by a re-emergence of the strength of the bulls here. I would like to see a little more weakness before I went heavy on the bear's side.
Asia
Heng Seng and Shanghai had a trend down day closing on their lows.
Europe
Europe had weak gap down openings that have been rejected and are now trading at their highs of the day as we speak (or write as the case may be).
United States
Economic news
This mornings jobless claims will be watched as we have spiked the last two and approached that ominous 500K number. Bulls would like to see that number stay down below 500K an a reversal of the up trend.
Earnings
Breadth Charts
40 DMA % Index
You gotta luv this chart. It is still steaming ahead as if the bull market here were putting in a higher readings and still pointing to the skies. On the Russell we now have over 72% of the symbols trading above their 40 day moving average. Just two weeks ago we were down at 17%. Impressive turnaround and a sign of the breadth of this rally action. The chart scores a bullish +6 today.
10 Day High - Low
Although the 10 day high - low chart put in lower day bars the momentum indicator is still up and the the bars were still quite high. We did loose momentum yesterday which was evident in the pricing action. The chart scores a neutral 0 today because of its inability to put in a higher bar.
52 Week New Highs
Our 52 week new high chart mimic the 10 day high chart with a lower daily bar but upward momentum on the 5 DMA. That scores this chart a 0. The new highs despite the loss of momentum remained elevated.
Conclusion
| Chart | Score |
| 40 DMA % Index | +6 |
| 10 Day High - Low | 0 |
| 52 Week New Highs | 0 |
| Total | -+6 |
Today we are scoring a +6 moving from at +18 perfect score yesterday. This reflects the lack of upward progress on all the indices. We begin to look for a trend now of either returning strength, gathering weakness or sideways indecisive chop. Until we know or see a stronger side you must respect the bull here who still has the ball.
$SPX
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Yesterday I mentioned watching the 1123 area for resistance and the 1125 Fib area. Both of those turned out to be key pivot areas in yesterday's market. The price action yesterday gave something for everyone. A little bull action, a little bear action an ultimately sideways action. Shorting 1123 could have been very profitable.
Who won? The bulls are still in charge they were able to defend the 1116 line and were able to break out of Tuesday's trading range to new highs. The bears played in the box unable to break out. Today the areas are the same as yesterday.
Bull Plan: Gather up and regain the high ground. There may be some reluctance to do this before the Jobs number on Friday. A climb back up to the 1125 and a close above 1123 before tomorrow would be bullish.
Bears Plan: Capture the gained downside momentum from yesterday afternoon. Close that gap down to 1115.50 and push down to 1113 and make some prints there. A close below 1116 before tomorrow does even more damage to the bulls momentum.
Good luck out there.. The bulls are still in charge but resting and giving an opportunity for the bears to play a little here. Still very strong on the bull-side so be careful with shorts and scale into returning strength.
-Marlin aka RedliionTrader
