Bears Slowly Seizing Control
The trench warfare continues. On the S&P 500, the upside defenses are around 1390 while the downside defenders are at about 1350. As noted last week, this is still a narrow trading range that looks as though it may be the formation of the right shoulder of a head-and-shoulders top that began in February. A move out of the range in either direction, especially if on heavy trading, would be likely to lead to a substantial intermediate-term move. Top of the formation, might be the old highs around 1430, while the downside target is shaping up to be 1295.
I am particularly bothered by the fact that, over the past three weeks, the heavier volume has been coming in on the down days and the lighter volume on the up days. It's a sign that the bears are gaining control. Moreover, the Arms Index moving averages are neutral on a short-term basis, which indicates there is little fear in the marketplace. Further, the longer-term moving averages are still overbought. I do not believe the market hesitation that began in March is over, and I believe it is likely to carry the major averages lower....287 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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