I consider yesterday to be the first full business day after summer. Except for the Tech Monsters, there was quite a bit of broad-based but minor selling.
Concerning our market proxy, the S&P 500 futures, we tested the balance area low at 4410.75 yesterday and breached it overnight. But we are back into balance at this writing. So sellers did not pile in, at least overnight, giving us a WWSHD signal.
Also, when the balance area is breached and the price returns into the range, it frequently travels to the other end, which would be the all-time highs. Anyway, as this was also the down mode of the minor, 10-day cycle – nothing significant has been violated yet.
But, key levels have shifted focus to areas below the current price as any movement below yesterday’s low would be significant. You have the overnight low at 4497, also in the realm of the roundie at 4500. The top of the single prints is at 4492. Balance Rules remain in play for the larger range (4410.75 to the all-time high).
The concept “When What Should Happen Doesn’t” applies to today’s session. Failure to find acceptance below 4410.75 keeps things status quo even with the overnight price exploration since we don’t “count” that towards structural repair or change.
In the bigger picture, today puts us exactly two weeks from the next FOMC announcement. The focus will start to shift towards that meeting gradually. Thus far, sellers have been noticeably absent in this market, and there is no obvious catalyst that would attract them until the meeting. Sector rotation continues to keep the overall market healthy.
A.F. Thornton