Not so bad this morning, right? All-time highs, at least for a nanosecond. Tick distribution has been mostly positive. A/D lines and breadth look constructive. The Cumulative Tick is hanging in there. More volume is going into the stocks going up than down.

Basically, we have a Gap and Hold on slow tempo – mostly bullish. There could be a powerful reversal pattern forming. So what the heck is there to complain about? Ok, the put/call ratio shows complacency. So what else is new?

There is just one problem. That darn WEM high is drawing the price back down to 4256 (on the SPX cash) or about 4248.25 (to be exact) on the 24-hour futures contract. The WEM high is acting like honey to the flies – just as we suspected this morning. At least, that was the 70% probability.

The decline does have a falling wedge (reversal soon) look to it. There is no law against playing up above the WEM high, as long as the price gets home before sundown tomorrow. Always watch out for that lost glass slipper…

Bigger picture, I am watching the waning momentum illustrated at the bottom of the chart. Keep in mind; this two-hour candle is not closed yet, so the momentum still might break the downtrend. If it doesn’t, that could indicate a double top with the high from last week. Also, I do not see a true pivot lower yet on the 2-hour chart. I am still using the 2-hour as my master day-trading chart.

Let’s see what they can do with the afternoon drive. My sense is that if the market can hold here, we might have a chance to move up to the top red trendline on the chart connecting the recent highs early next week. Don’t forget; we roll into the end of the calendar quarter next week. That could get interesting as well. It is always something.

My next update will be after the close, unless something significant unfolds.

A.F. Thornton