Before the Open

Good morning. Happy Wednesday.
I’m not sure how to read the action over the last two days. We entered the week with the market in a 1-month uptrend…it’s been 3 steps forward and 1 step back, and it’s been several weeks since the market has lost ground for more than 2 consecutive days. Now the market has fallen but volume has been very light. The charts remain in decent shape, but one of our scenarios is playing out…namely we’re getting false breakouts across the board. Many stocks have broken out in the last week or two and have given everything back. The trends remain up, but this isn’t exactly an ideal trading environment. Here are some examples. AMZN, CSCO, QCOM & SHLD broke out to new highs last week and were immediately sold.

Couple these false moves with the indicators being in overbought territory and my suggestion to be on your toes makes sense.
Earning season is here. I’m sure results will be ugly, but ugly is expected. Don’t assume the market will sell off when bad news hits. Of course you can’t assume the market will ignore the news and rally either.
Here’s the 30-min SPX chart. The trend is up, but these falling wedges really zap your trust and confidence in the uptrend. Over the last 14 days, the market has made a higher high and higher low, but 7 days have been up and 7 down…not fun to play with.

Stay on your toes.
headlines at Yahoo Finance
stocks to watch MarketWatch
upgrades/downgrades
earnings & economic releases

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