The selloff on Thursday in the Stock Indices was not met with selling pressure.  Volume increased, but breadth never developed impulsively to the downside.  That led to the psychology of “buying the dips”.  Thursday the Indices closed at their highs, setting up the rally for Friday.  It is simple to develop trade strategy in the current environment.  It is simply to continue to be long and look for long positions.  This market, although in need of a healthy correction, will not see one until there is enough selling pressure to “run over” the “buy the dips” traders.  We will see that when the Indices closeRead More →

The Stock Indices are still in a pause phase.  While some days result in slight new highs, there is a very weak structure underneath the rally.  However, there is also no selling pressure.  Any move lower draws in buyers to “buy the dips” and the Indices rally.  However, as a result of the weak internals, the risk is to the downside.  If selling pressure were to increase, those who step in to buy the dips will quickly get run over and the pressure to sell will increase dramatically.  The Indices are in need of a good correction, but for now, the trend is up andRead More →

The trend in the Stock Indices is up.  That is certain.  However, within that trend the structure is beginning to show more weakness.  The NASDAQ, while breaking out on Thursday, has not confirmed the S&P.  The Russell appears to be rolling over.  New highs declined going into the end of the week.  Volume keeps falling off with each successive new high in the Indices and market breadth continues to fall.  Unless the structure of this market can strengthen, the risk is to the downside.  Traders and investors should respect the trend but also not ignore what is happening to that trend internally.  The market needsRead More →

The inter-market divergence between the S&P and NASDAQ still exists.  The internal structure of the rally last week is still not significant, but the trend in price is up.  Lean toward long positions, but with a wary eye.  The internal strength of the rally gives concern over its viability.    However, the trend is up and it must be respected, however only to the point that you recognize the possibility of a reversal, due to the weak internals.  Until the internals strengthen to support the climb in prices, use caution.  Market Breadth has been consolidating for the last two weeks.  This suggests there is the potentialRead More →

When a financial instrument reaches an important support or resistance level, it is typical for it to pause.  Traders understand it is an area of “unfair” price and they step back to determine if value is higher or lower.  This is typical in all degrees of time.  In terms of the Stock Indices, the NASDAQ has been paused for almost two weeks.  The S&P has been paused for this week and the Russell is putting in slight new highs.  If the NASDAQ and S&P were to break through Friday’s low, it would be a break through support in multiple timeframes and suggest vertical development lowerRead More →

The weekend Briefing discusses the longer term internal flaws that are occurring in the current Stock Index rally.  However, I also cover the respect we must show the rally in the short term.  An internal weak structure typically will cause a countertrend move, but it is impossible to determine when that will occur.  As always, there is a lower probability the internals will strengthen to support price, but that typically will occur around a news event.  Problematic to the short term is the fact the NASDAQ appears to be weighing on the S&P.  Internally in the S&P the SPY (a cash ETF that tracks theRead More →

As I outline in the Briefing, trading is a series of probability assessments.  We analyze the markets or and instrument and then decide on the greater probability of one event occurring over another, always keeping in mind the lower probability may eventually become the higher.  This is where I find the Stock Indices on a longer term basis.  The series of runs and pauses we have experienced are either complete and we are headed up to test and put in new all-time highs, or they will break down and move lower in an even greater degree time and price pause.  At this point the marketRead More →

As I outlined in the weekend Briefing, the higher probability was for another low today, trading below Friday’s low.  I suggested if that were to occur to watch for a divergence in Breadth and some type of rotation back up.  Breadth diverged and the rotation up happened perfectly.  Now, the question is whether the rally off of today’s low is a short term move, which will complete possibly tomorrow, or is it the beginning of something more complex to the upside that may take a few days?  The Briefing outlines the key areas to watch in terms of the development of price over the nextRead More →

The “throw over” that was discussed in the August 5 Briefing occurred the following Tuesday.  As I discussed in this week’s Briefings, the analysis suggested the move lower was not complete.  On Friday of the past week, the Indices put in new short term lows.  Those lows were met with an extreme oversold condition and diverging internals on Friday morning, suggesting a countertrend rotation up to some degree.  That rotation did occur and appears to be complete, although there is a chance it could develop into a more complex rotation.  While I believe it is the lower probability at this time, if there is someRead More →

As I discussed in the weekend Briefing on August 5, I anticipated a “throw over” move in the Stock Indices that would lead to a significant selloff.  That occurred two days later.  In the past weekend’s Briefing and in two Briefings this week, I also suggested the move lower was not complete and the move off of the recent lows was a countertrend move that would lead to another leg down.  That is exactly what occurred.  At the end of trading today, the Indices were extremely oversold, suggesting some type of countertrend rotation up may occur.  However, countering that was the fact the Indices closedRead More →