Today was odd with all indices closing up and thus resetting the clock (remember the seven day rule) with the exception of the SPX. After selling off the opening highs for the second day in a row the SPX moved below the 1,334 level (model price trigger for a short signal) but then reversed and moved higher. As a result the SPX has technically been down four sessions.
Part of the reason for the reversal in the SPX is downside momentum is not quite there yet. Downside momentum on the RUT and MID, both of which have signaled short is also somewhat lacking which explains the reversal and very mild close higher.
Volume and breadth continue to signal a tired market. A market where no one wants to do anything beyond an intraday trade. Adding to the uncertainty was further economic weakness in the form of housing starts and weak corporate earnings.
The other level of uncertainty pertains to next week’s FOMC meeting. The Hilsenrath piece from Tuesday caught a lot of attention today. Lots of discussions, opinions, interviews, etc in trying to determine what the Fed will do. I continue to believe that the Fed will