Looks like you were right with QE3 rumblings and european bailouts driving the SPX higher yet again. Looking ahead, the statistically irrelevant Dow 30 is leading the way and the Rut, comp, ndx and DJ 20 are all lagging. Going into August, which has been a really bad month, in fact the worst month of the year has been moving earlier and earlier the last few years, this could be yet another poor Aug showing. The x factor is the election. Fuel prices will likely drop with the oil reserves being implemented, which may help the economy. The fiscal cliff continues to weigh, and the economy is clearly slowing. A lower swing high here, will not bode well for technicals, let's see how far up we go this time. Most mesured move technicians are calling for 1404 on the spx. With the lagging confirmation, i'm thinking 1390ish. All opinions are welcome, good trading.
If you don't sell 80% of your longs today when SPY is at 138.45, on Monday Italy, Spain, and Greece will make you miserable again.
SPX is at the upper end of the channel, for the fourth time in 2 months. This time it coincides with the decending trendline beginning in 4/12. Since a lower high for the SPX was emphatically negated on Monday, some follow through is expected. Last week's move from the bottom of the channel to the top of the channel was the most rapid yet. Consequently, there is a new gap near the low of the channel. As markets appear to be weakening, AAPL is showing strength. They must be optimistic in their suit against Samsung. DJ Trans looks to be showing divergence, greatly lagging this channel move, and developing 2 lower highs at this point. The COMP is also lagging and could initiate a similar stance, along with the RUT. Overall, U.S. markets are shadowing eur/usd more then they statistically have the prior 30 years. Bottom line opinion is the upper end of the channel holds for another leg down due to the divergence and real and present poor economic situations. QE3 would move all markets higher short term.
With the VIX hitting multi year lows, the S&P continues to drift higher, apparently drawn to the highs like a moth to a flame. The ATR5 has shrunk to 8 points and this has all the signs of a market top, that simply is not finished just yet. With volatile periods in recent August months, and many predicting the same this year, we are getting just the opposite this August. Today's SPX high is 5 points from the 5/1/12 high, and 12 points from multi year highs. The Dow is also closing in on multi year highs, about 100 points away. The DJ20 looks to be finally starting to break out of its wedge pattern, and to the upside. The NDX and COMP continue to drift higher as well. Even though RUT is lagging, it is starting to follow the rest of the market. It is somewhat perplexing how the news of Europe has all but vanished, eliminating their hand in volatility, the VIX has cratered, and the metals continue their slide. One would think all is rosy at this point. Historically the worst month of the year is September, recently displacing October. It will be interesting to see what triggers the VIX pop.