Nightly Report - Market Conditions

The close today was interesting. The market actually dropped during the last 2 hours of the trading day. Even though I have a preconception that 1205 or 1196 will be resistance, I have to accept what the market is saying. What the market said today was that solid resistance is @ 1184. It is what it is.

Let's give it three days. If 1184 continues to stop the stock market in its tracks, then we should be prepared to move out of the C Fund and into the G Fund.

There are additional reasons for this caution tonight.

First, smart money was selling in the last two hours of the trading day today. Those sellers were not dumb money.

Second, the RSI indicator closed @ 70.29. That is an overbought condition.

Third, there is almost triple negative divergence between the stochastics and the price action on a yearly chart at clearstation.com. In other words, the price has been going up while the stochastics has been heading downward since September.

Fourth, the blue MACD histogram bars continue to flat line. This condition is further evidence of a negative divergence.

Finally, the 50-day moving average and the 200-day moving average are about to cross beneath the current S&P price. From what I have seen, the S&P price will be drawn towards this crossing of the two moving averages. It is an odd development but the cross acts like a magnet. This happened on July 1, the absolute bottom of the market for this year. The probabilities favor the S&P dropping down to the level of these two crossing moving averages.

Note that the 50-day moving average is currently at 1113.56. The 200-day moving average is currently at 1119.93.

Conclusion:

For these reasons,I am issuing an alert tonight. We should be prepared to move from the C Fund to the G Fund if resistance @1186 is not successfully broken within the next three days. The risks of a market down draft are very high.

Be careful out there!




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