On Friday, we experienced an emotional market slide during mid-after trading that proved one thing – this market is holding on to highs, but appears to be on shaky ground. I tend to think a lot of Friday’s action was related to the possible government shut-down a desire to minimize risk. However, it is worth noting that the last hour of trading brought in some bargain hunters.. in other words, there are still buyers.
The best illustration of where we are today can be represented in the SPX – We’ve been putting in a flat top with lower lows over the last week, or so. It looks similar to what a diving board looks like when you walk out on the end and start bouncing up and down in preparation for the dive. The question is which way the market will go.. Will the diving board launch us up or will the weight of the market break the diving board and we head south? I’m not going to predict it, but it’s important to stay nimble and prepare for a quick move one way or the other.
You can see the ‘diving board’ I drew in on the daily, below:
Here is an illustration: Both moves are strong, so I’m waiting for that action to go in heavy one way or another:
Market summary and commentary: