We are four weeks into this correction now and there is still no follow through into any direction. As seen from the SPX daily chart below, market is still caught in a descending channel. Furthermore, the Friday action suggests the red resistance line should hold into the next week also. We got the third wedging rally in three weeks and index sold off immediately once it approached the line. Volume was exceptionally low, but this could be due to the prolongued weekend.
The weekly picture is much more promising. Three weeks of slow descending with tight closes and low volume gives the apperance of a very strong bull flag. Once and if SPX breaks above the red line it could take off much higher from here.
All in all we still have no confirmation that the market is willing to make a substantial move into any direction. Until we get one I will stay on the sidelines and wait for my opportunity.
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