The SPX saw a third day in a row of red candles as the market consolidates on profit taking from bulls and general hesitation from buyers. Let’s not complicate the issue or freak out.. The SPX is still technically in an uptrend, but the long trades are few right now as many of the market leaders are taking a breather.
The easiest explanation for the equities pullback is the move up in the dollar. Keep an eye on UUP. The dollar is attempting to break through SMA50 – if it does, the equities market is likely to give back more over the next few days and SPX SMA20 will be taken out. We’re in neutral land right now with clear direction not yet defined… I tend to think that we’ll trade lower, but the charts are all that matters and the Fed is fighting hard to keep the markets propped up.
I’m still heavy cash – we’ve been on quite a run and this is either a healthy consolidation or the beginning of a pullback. Going to bed with too many longs right now could really hurt – not worth it.