Good morning. Happy Wednesday.
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I don’t know if it was the overbought indicators that caused yesterday’s selling or if that was just a coincidence because the market needed it anyways. In any case, after pushing close to their highs, the market sold off in fairly orderly fashion. Volume wasn’t too heavy, and there wasn’t anything overly alarming about the action. My internal indicators are still in overbought territory, so I still think the market needs a few days of rest before attempting to bust out again. Here’s the 30-min SPX. Going back to last week, I’ve always considered 825 stiffer and more significant resistance than 800.
Downside target? I’m more interested in a pullback lasting a couple days than specifying an exact level it needs to retest (although filling Monday’s gap would be nice). People have become quite bullish out there – even Abby from Goldman came out yesterday and said SPX fair value was 900 (I thought she was removed from SPX forecasting duty). A correction to shake the market’s confidence is needed. Then Wall St. can climb that proverbial wall of worry.
Be patient. We just went through a couple weeks of easy trades. Now we have to wait for the charts to re-set.
headlines at Yahoo Finance
stocks to watch MarketWatch
upgrades/downgrades
earnings & economic releases