Monday we saw the bulls try for another gap higher and go trade. It worked for most of the day but by the time the bell sounded, the SPX closed lower than the gap open, even though it closed +5 on the day. This market is looking very tired-we have enough wave structures to call it complete-we are trading within Woody’s weak period and for the most part-the only way the bulls can move the tape higher, is when the cash markets are closed. The series of lower highs and lower lows-has the short term trend down. Monday we saw yet another lower high and the spx reversed right at the downtrend resistance line.
So the short term trend is down, but the bears need to get the spx below the 2400 level and close it below to get more selling momentum. Once that happens, there should be a reaction trade down to 2375/2350. The bulls need to get the spx back above 2444 to pause this series of lower highs and lower lows. Above 2444, we should see a reaction trade up to 2450/2454. Momentum is neutral and there is a lack of bullish/bearish divergences. I prefer shorting strength at resistance levels, but stay open minded until the bears can push the spx below 2400. But with the leader (nasdaq) lagging, I think the bulls are going to have a hard time trying to push higher. Resistance level: 2444-2450-2454