Late Day Swoon Puts Market in the Red - Posted by Coolhand

The S&P struggled most of the day to hold its neutral line before succumbing to selling pressure as the market was nearing the close. The DWCPF showed relative strength trading well above its own neutral line until that same late day selling pressure pushed price into negative territory at the end of the trading day. Both indexes lost ground, but the action did not make the future any easier to discern.

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Weakness over the past 2 days has stalled a rally that started late last week. That rally (last week) was a response to significant selling pressure earlier in the week that saw the smart money go bearish last Thursday. Yes, support is holding at the 50 dma for the S&P and at horizontal support for the DWCPF, which is good, but momentum remains negative on both charts. RSI is also weak to neutral.

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Cumulative breadth, which has been bullish the past few trading days, dipped on today's negative action, but does still remain technically bullish. But has the signal stalled? Is it rolling over right now? It might be and it might not.

So, the action is beginning to put into question the voracity of the end-of-week rally last week. NAAIM being bearish should certainly be cause for some concern if you are a bull.

The bottom line is that it remains a mixed picture and you can latch onto the bullish aspects of the action or the bearish aspects depending on how you want to interpret the signals. But don't forget the sideways trading pattern on the DWCPF that has gone on for months. It may yet prove to be the proverbial canary in the coalmine.

I remain guardedly bearish (guardedly because I can change my mind if the action warrants such).