Candles similar to the one I'm calling a potential Wyckoff upthrust appear all the time. Most of the time they represent a day of indecision and just become another candle as the markets move on. You will often see these type of candles, spinning tops, gravestone doji's, shooting stars, etc, at turning points but you can find them all over the charts and they are very often ignored. The current upthrust candle has yet to be confirmed or invalidated as the markets have moved sideways the last couple days. It's certain to be confirmed or invalidated soon, or famous last words.
$SPX off 2pts on the week but what may prove to be more important is that we're back in and stuck in the previous month long consolidation that began in December, 2013. Buyers who bought in late December and early January are sleeping better these days and they'll sleep even better if the markets can move up and out of this rectangular consolidation zone. On the other hand, those same buyers aren't likely to want to sit through another pull back and may be exiting now and their selling may be the reason the rally has stalled. If this is the case, then the markets are absorbing that selling with little damage done but I do believe that at the first sign of overt weakness we will see more and more of those December/January buyers hit the exits and their selling will beget further selling as the market full fills its own form of self prophecy.
To avoid an increase in selling, the market needs to clarify its intentions early in the coming week because right now the market is sending a mixed message. Fer instance:
$NYSI is rising and is now at its highest level going back to May of 2013 and this indicates that the market is moving up with broadening participation.
On Balance Volume remains bullish and is confirming this latest move off the early Feb lows.
$VIX 5EMA is at 14.7, well above the 13-12.5 area where it has turned in the recent past.
But:
$TRIN closed at 1.46 on Tuesday, the 18th, when the $NYSE was up indicating a bit of stealth distribution. During the December/January consolidation, the $TRIN closed above 1.xx on several days when the market closed green so if you're bullish you don't want to see something like this repeat.
P/C ratio closed at .69 on Friday which means that everyone is on the same side of the boat. During the December/January consolidation, the P/C ratio closed numerous times in the .7x area indicating a complete lack of fear by participants. We were not climbing a wall of worry and look what happened. So, again, we don't want to see too much bullishness from the P/C ratio in the early days of next week.
Despite the immediate above, I do believe that $SPX will make a run for the 1850 area early in the week and I also believe that we could see $SPX close out the week above that key level. Even though this is what I believe, the market may have other plans so stay on your toes until we clear this resistance zone.
GL in the week ahead.
.
$SPX off 2pts on the week but what may prove to be more important is that we're back in and stuck in the previous month long consolidation that began in December, 2013. Buyers who bought in late December and early January are sleeping better these days and they'll sleep even better if the markets can move up and out of this rectangular consolidation zone. On the other hand, those same buyers aren't likely to want to sit through another pull back and may be exiting now and their selling may be the reason the rally has stalled. If this is the case, then the markets are absorbing that selling with little damage done but I do believe that at the first sign of overt weakness we will see more and more of those December/January buyers hit the exits and their selling will beget further selling as the market full fills its own form of self prophecy.
To avoid an increase in selling, the market needs to clarify its intentions early in the coming week because right now the market is sending a mixed message. Fer instance:
$NYSI is rising and is now at its highest level going back to May of 2013 and this indicates that the market is moving up with broadening participation.
On Balance Volume remains bullish and is confirming this latest move off the early Feb lows.
$VIX 5EMA is at 14.7, well above the 13-12.5 area where it has turned in the recent past.
But:
$TRIN closed at 1.46 on Tuesday, the 18th, when the $NYSE was up indicating a bit of stealth distribution. During the December/January consolidation, the $TRIN closed above 1.xx on several days when the market closed green so if you're bullish you don't want to see something like this repeat.
P/C ratio closed at .69 on Friday which means that everyone is on the same side of the boat. During the December/January consolidation, the P/C ratio closed numerous times in the .7x area indicating a complete lack of fear by participants. We were not climbing a wall of worry and look what happened. So, again, we don't want to see too much bullishness from the P/C ratio in the early days of next week.
Despite the immediate above, I do believe that $SPX will make a run for the 1850 area early in the week and I also believe that we could see $SPX close out the week above that key level. Even though this is what I believe, the market may have other plans so stay on your toes until we clear this resistance zone.
GL in the week ahead.
.