Once again the market fails to get through 1150, but this time no sell off. The last time we spent a week bumping up against resistance, back in early August, the result was a collapse. There is no reason to believe (yet) that that is what is in store for us now, and a pulback here could give the market the ammo it needs to break out. However, we have seen a pattern the last few months of good month, bad month, and if it holds, we are due for a bad month.
The weekly chart isn't helping us much here, because there is virtually no change from last week. On a weekly basis, CMF is still rising, and stochastics, while slowing down, are also rising. The big increase in volume I expected in September never materialized, and while everyone is raving about how good a month it was, we really didn't go that far.
The Nasdaq broke through resistance last week, and held the new support this week, but ootherwise is in about the same technical shape as the SPX. Thi has had a bit of an increase in volume in September, but nt enough to convince me the big money has gotten back in, and mediume term decline in CMF (peaking over a year ago) seems to confirm that.
The Dow industrials have held up best throughout this correction, which is a sign that the market is still defensive.
The Dow transports have weakened considerably and are no longer leading. They got pretty good volume this week, but are having a terrible time at resistance. This could be the first index to start heading down if we do go down.
The weakness of the Russell 2000 had me worried on the way up, but has recent strength, and if it continues this rally will go for a while. If it reverses suddenly (which it is prone to do), it will take the rest of the market with it. There is nothing on the chart to indicate that is going to happen anytime soon.
The market is pretty much range bound, and probably will be for a long while. The Fed is out of bullets (yes, they can do QE2 and all that, but that is having diminishing effects on the market), and the government is trying policy after policy, all failing. One of these days they will realize that the one policy they haven't tried will be the one that works: let the market sort things out. What a concept.
I will have the new highs update shortly.
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