Market Review 8/6 The Market Should Turn Down

It has been interesting to watch the market the last 2 months slowly chop its way up.  The S&P has been particularly choppy on its way up to its recent highs.  All the talk last week was focused on Ben Bernanke and Mario Drahgi which had a profound affect on stocks and dragged the SPY down to where on a technical level we have been finding a support.  Then when Friday came along and the jobs numbers supposedly looked good (See Real Unemployment Rate) the market jumped on those numbers plus falling bond rates in Italy and Spain contributed to the enthusiasm on Friday.

It looks though that we are about to reach a short term drop in the markets.  After such a large move on Friday and a gap up today i believe the steam on this move may run out.  We have finally reached $140 and as I have said in previous posts people who bought the SPY in May are looking to break even and I am sure there are some sell orders at this price level.  I am not sure how big a sell off there will be or if it will be one that continues for the next month, but I do think the SPY is going to pullback here. 

Some other things that are interesting to note; today's volume was one of the lowest for a non-holiday.  Meaning that institutions are not completed vested in today's move up, even Fridays volume suggests that not everyone is on board.  The neutral candlestick we saw today has predicted the previous 4 drops.



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Disclaimer: This article is intended to be informative and does not constitute a buy, hold, or sell recommendation., and should not be construed as personalized advice as it does not take into account your specific situation or objectives