Today ended up as the textbook range day.  On our principal S%P 500 index, we had a slight range expansion on the upside, but matched the Globex low, and of course stayed well above yesterday’s low. Value was unchanged, but the POC moved higher. But for the Weekly Expected Move high, the markets could have gone higher. Overall, the pause likely added to the bull case. 

Responsive trading ruled the day, with the top of the range and gains capped at the Weekly Expected Move highs for the S&P 500 and NASDAQ 100. No surprises.

I had written something quite extensive this morning and somehow lost it. So I will try to rewrite it for tomorrow. The macro picture remains the same as outlined on Monday, with the stealth correction creeping along in most sectors. Technology and the FAANMAN+T stocks are holding the market up. But this will lead to a classic breadth divergence given the positions of the major indices. We even have a butterfly top formation on the NASDAQ 100, but it is not quite yet complete. 

We also have a Dow Theory sell signal on the market, a fairly reliable indicator over the past 100 years. The math took the S&P 500  and NASDAQ 100 a bit higher than expected, but it has not yet changed the larger forces at work. Rotation complicates the picture, but everything will be correlated in the downdraft when the bulk of the correction materializes.

Maybe the 18-month correction will be shallow. We saw this after the 1987 crash and the recoveries in 2003 and 2009. But the latter corrections still approached 10%. Anyway, the price will lead us to the next move. I remain neutral to bearish until we get a solid buy signal. 

Let’s get through the rest of the week. Next week, the Founders Group will shoot at some shorts with a rifle (sectors) rather than a shotgun (the broad S&P 500 index).

Anyway, the day was uneventful, for the most part.

A.F Thornton