Since the end of 2012, the bears have been pathetically weak on every timeframe over hourly. It looked like they might have recovered some mojo on Thursday, but the strong rejection of those lows on Friday, with the close back over both the daily middle band and the 50 hour MA, killed off that impression fairly effectively. While SPX is making lower highs the bears aren’t entirely out of the game, but unless we see the 1952 low taken out, it seems a reasonable assumption that SPX is just consolidating in a range before the next move up.
In terms of the stat I’ve been following I’m writing it off unless there is a strong break below the daily middle band early on Monday. If we see that, then the target is a test of the 1952 low. If not, then the last day for that target to be hit on the stat is Monday, so it dies at Monday’s close. As it is the stat performed reasonably, with a lower high and then a break down below the middle band to a low only six points above where the lower band closed the week. I’d be surprised to see anything more on this. SPX daily chart:
What about the H&S on the Russell 2000 though? That just retested the H&S neckline on Friday and still looks entirely ready to head down towards the H&S target in the 1090 area. If SPX breaks up hard here then we might well see RUT rally to the 1170 area, and a break over 1170 would kill off the H&S. It may be that this will still play out however and if so, then that may keep SPX from breaking up with any force and keep it in a consolidation range. RUT 60-min chart:
So what’s the takeaway here? Bears are still six feet under from a technical perspective, and the bear hand breaking up through the earth in front of the headstone on Thursday seems to have just been a lost rat. RUT still looks dire and I can’t see any obvious signal of a low there. If SPX breaks up without a strong rally on RUT, then it may be a slow business.
My suspicion is that we are in for a two way and mainly sideways market for the next week or two which will at least please the daytraders.