The market managed to stage a late afternoon rally on increasing volume as it once again managed to hang on to the critical low 800 level. After early morning selling, then a slow climb back up close to its prior close, it looked like the bears were moving in for another mauling as the SPX made its low for the day with good selling pressure once the index broke back below the 820 level. But the pressure, though fast was not on heavy volume and soon the bulls took over with a dramatic increase in volume the last hour with the net result the S&P 500, NAZ and the Russell all ending just a fraction higher on the day. The DOW was basically even. The question is where does all this take us. Looking at the SPX daily chart below you can see that we managed to tenuously hang onto out lower TL.
The market needs to make its stand here. A close below the lower trend line would not be favorable and especially a break of the prior low at 804 will set off red flags from a technical viewpoint. So the result is for the moment we remain trapped into this rapidly diminishing trading range. We need a move back above the 875 range and then above the upper trendline soon or we find ourselves going back to test our prior lows. Sentiment indicators are about neutral with some favorable and others not so with no real clear indication, ie probably why we remain locked into this pennant.
On other fronts, gold has managed to break out the past day or so and gold stocks which had stopped to take a breath at the end of last week resumed their upward trend. Next resistance area on gold will be the 990ish range as you can see in the chart.
Bond prices have started moving back up past few days since our leaders newest game plan in case no one has noticed. Personally, I think this is a relatively short term bounce but with so many economic unknowns not willing to bet against it at the moment, therefore I closed out my TBT trade at the end of last week, fortunately in hindsight as its come off about 3 points. See trade of the day. The only position I’m holding currently from a trading standpoint is a small Q call one that I will definitely stop out of if we break the 804 level.