The broad stock market, as measured by the Standard & Poor’s 500 Index is in a downtrend. The chart is showing a pattern of lower highs and lower lows. That is in line with the bearish signals that are emanating from our intermediate-term indicators. However, some oversold conditions had built up, so a short-lived rally is under way. The S&P 500 SPX +0.81% found support near the 1,630 level and is now in the process of rallying toward its declining 20-day moving average (currently at about 1,663). It is typical for an oversold rally to peak slightly above that moving average. There is resistance at 1,670 and then the major resistance at 1,680. A close above 1,680 would likely change the picture back to bullish, for it would interrupt the higher highs-higher lows pattern. Meanwhile, a decline below 1,630 would reinstate the bearish case, with force.
Posted on: Thu, 05 Sep 2013 01:41:33 +0000
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