Once again this market finds a way to find support and not go out on the lows. Technically speaking the S&P 500 and Dow notched a day of distribution. However, we must discount volume due to yesterday being a holiday. Moreover, the support off the lows certainly dispels the thought institutions were selling stock on the day. We still are in a neutral environment here even with yesterday’s move in a few leading growth names. Price confirmation is a must in this environment and until we receive it we’ll keep on our path.
We have been treading water the past few sessions after Friday’s retracement of Thursday’s meltdown. The McClellan Oscillator is actually in oversold territory believe it or not. Breadth is a big part of the oscillator and it has been pretty weak as of late pushing it lower. It wouldn’t surprise us if this market has at least another leg higher from now until the year end and with oversold conditions already anything is possible. As always we obey price and our rules rather than guessing where the market heads next.
Today was quite a boring day in the markets. There wasn’t too much excitement and felt pretty dull even with volume coming in higher than Monday’s level. Stocks like BITA and BABY looked solid in their moves today. These stocks were another positive sign for this market and its ability to push up higher. DDD even followed through on Monday’s gains. As long as we are following our system properly we will come out on top.
We do have options expiry at the end of the week. This may have the potential to cause a bit of volatility intraday. It will surely increase volume on Friday. If we continue to see leading stocks break out and hold while this market heads sideways we’ll see the general market following along. In the meantime stick with the plan.
