The Market is Not Behaving as it Should

When an inside day breaks out to the upside, the target should be reached fairly quickly. There is no slow motion move to the projected price target. As you know, the inside day breakout should have taken us to 1292 on the S&P 500 Index today. That did not happen. Instead, we got a meandering market. In fact, the day was technically a down day on higher volume than yesterday. This is bearish action.

Because of today's price action, I am revising my price target. I think 1279 is a more likely top for this move than 1292. Thus far in January, we have had two down days where the volume was greater than the previous day. Some analysts might describe this price action as "distributive." That just means that institutions were selling to the retail public as opposed to accumulating shares. William O'Neil has written about discerning the tea leaves of distribution from volume on down days.

Tomorrow is Friday. The jobs employment report comes out tomorrow. The expectations are high. Observe how the market reacts to the news, not whether the news is good or bad. The market's reaction will give a hint of whether the Bull Market remains intact or not.

The prominent trader, Larry Williams, is just a walking library of wisdom. I noticed today that he determined Fridays were the best day of the week to sell S&P 500 futures. He also noted that Fridays can offer a very intriguing opportunity. If the market opens higher on Friday and then sells off to the previous day's high, then the market should be sold. This is a simple pattern that has a high probability of a pay off. So, watch the market tomorrow and observe whether the market opens higher or not. If the market opens higher than today's close at 1273.85, see if the market sells off during the day to today's high price of 1278.17. If this pattern holds up, then tomorrow may be a good selling day.

We may be closer to the correction than I thought.

Wink

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