I don’t have much to say because I don’t understand how the transports can be down 2.77%, the $SOX index can be down 0.98%, IWM can be down 0.44%, RTH can be down 0.50%, $CYC can be down 0.98%, XLF can be down 0.58% and yet the markets close essentially at par, +/- a few points. This makes no sense to me and reeks of manipulation.
On Thursday and Friday of last week things started looking good for a pull back, but nothing has come of it so far and now breadth indicators are recycling so it appears this was a missed opportunity. We are now in a consolidation period much like that of late August and are awaiting some news out of the Fed or out of Europe that will propel the markets higher once again.
Today’s candle on $SPX appears to be a Dragonfly doji which is generally considered a turning point candle. It really isn’t in the right place and should come at the end of a trend not a four day consolidation so it may not mean much.
With the exception of the transportation index, we still do not have any real signs of overt or covert distribution and volumes so far this week have been insignificant. While I would love to see a nice big phat pull back I have my doubts we’ll get one because there appears to be quite a bit of interest in defending price at current levels.
While I would be very cautious adding to existing long positions or initiating new long positions here, I see absolutely no reason to try to short this market.
Those $SPX/w$VXO and $SPX/w$VIX charts I put up in August are now back where they were around August 20th. Until August, those charts had worked fairly well. Maybe they’ll work this time, though I certainly wouldn’t bet on it.
The markets can not live by tech alone, or famous last words.