Another double edge sword...
Gapping today below the 50-day moving average ... after having been turned back decidedly at the 200-day moving average ... the kings of the S&P confirm a growing weakness, and so a pre-election day throttling all the more appears a reasonable probability.
Yet still standing is yesterday's observed lack of selling urgency (unlike what occurred at April top). This was further evidenced today via improved advances vs. declines (see below) as the market's gap lower at the open was filled throughout the day.
Thus, although no collapse appears imminent, just cited price action in relation to important moving averages suggests what's left in the way of levitation — stretched white shoes buying time that additional capital might be raised — might prove duller than the Fed chairman (and this post I might add).
The view above was presented just over a week ago, and although growing underlying weakness revealed by this measure (NYSE Advances-Declines) remains intact, the [declining] trend to which I will draw your attention tonight is on the bottom end.
We see that, at lows marking major index bottoms these past couple months (in formation of wave (b) [up] since late-May) an increasing number of NYSE-listed issues simultaneously have been declining.
Thus, the currently forming wave b [of (b)] might not be completed by this week's gassing (explaining my projection drawn on the OEX chart above). Instead, its completion might coincide with still more negative NYSE advances-declines occurring sometime over the next week or so ... maybe tomorrow, or maybe sometime shortly following August options expiration (8/20).
The market's continued levitation going into September again tonight seems probable. Still, the anticipated train wreck to follow finds selling this week confirming that likelihood. This, of course, is occurring in the midst of a plentiful reservoir of both fundamental and technical weaknesses. These continue to raise the probability that, a nasty bout of trouble looms ... and should persist in so signaling over the next few weeks as the last gasp of the market's levitation since late-May reaches its end.
The "growth" epoch extending over the past several decades certainly has dwindled those numbering in the value crowd. Yet these presently find cause to step up here. No matter their begging soon to be fleeced, the value crowd, I believe, will be served all the shares they might wish to swallow at current levels. Of course, none of this changes the fact that, those serving and those being served both are weak, with far greater market moving potential resting with the former, rather than the latter...
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