While the long term trend remains to the upside, the monthly bar shows the S&Ps coming into Balance after making a high at 1705 and not seeing any further upside continuation. There is still no excess at the Highs. The weekly trend has turned to the downside as shown in the graphic below. The two similar weekly highs at 1705 indicate that the auction is not complete to the upside. The market may have gotten too long in the short term - hence the double top.
Looking at the Daily Bar below - I see two Balance areas - the one above extends from 1661 - 1705 and the one below extends from 1588-1620. Further downside continuation targets the 3 pt gap 1628.5-1631.25 and below that the top of the lower balance at 1620. The low of the upper Balance at 1661 is now resistance. However, given that the longer term auction is incomplete, I will be watchful/wary of any attempt of the market re-entering the upper balance.
Lets look at the Profiles next. After the downside breakout from Balance on Thursday, I don't see an elongated profile either Thur or Fri. For Friday - Value was overlapping to lower and we closed near the lows, however POC did not move down as price auctioned lower and we also left a poor high and several anomalies in the profile. Anomalies represent forcing action where the market was attempting to auction lower as we saw Friday but was struggling. These anomalies generally get revisited - not necessarily in the following session.
All of this indicates to me that this sell off is not very convincing. It may be short term liquidation to flush out the weak longs before we rally again. If we see continuation to the downside, we have 4 key references below that represent "structural repair". They are 2 prominent POCs at 1645 and 1634.5 that have yet to be revisited and an open Gap at 1628.50-1631.25. The 1620 area should provide key support the first time down as it represents the top of a Balance area.
There is light news on Monday and Tuesday, however FOMC minutes are due out Wed, Aug 21 - which may set the tone for the next leg of the market.
No comments:
Post a Comment