S&P 500 - July 12, 2010

Flat on negative breadth!

Today, S&P had a tight tape


I would not get overly excited about the intraday wave count on the chart above. It’s just my best guess for a bullish bias. I can easily do a bearish alternate. More important is that index is holding 1070. It seems like we had some sort of contraction today like we had on Friday. This one will likely be followed by a move, or spike higher as well.

Daily volume came below average and daily breadth was poor


McClellan Oscillator pulled back slightly today


It would be disappointing if index pulled back more severely without testing 1090, or, even better, 1100. As long as index can stays above 1070, it may consolidate and launch an attack at 1090.

This is a daily chart


RSI is just getting into overbought levels. The daily chart has a negative tilt. Still, this is an OpEx week and bulls have short term momentum on their side and that may be enough for them to at least test 1090-1100.

These past two days, volume has been well below average and I am sure some bears are highlighting that point. Soon, if index keeps holding levels and rallies, they may even start calling PPT conspiracy or something similar as the cause of the rally. All the rallies since March 2009 were led by breadth. It is not difficult to pick low volume rallies on the chart above that did not collapse. In fact, the move into April high came at increasing volume while the start of the rally in Feb 2009 was on lackluster volume.

This is a 60-min chart


It is getting overbought, it is showing some potential divergences, and, if the count is correct, it may be doing a last wave (or a last set of small waves) before it pulls back. 1070 is an obvious first area of support. Below that, there is support from MAs. The pullback, when it comes, will tell us if the bears are still in the game or not.

Bulls have done a really good job since the recent low. It’s not enough and more need be done to change the bias of the daily chart. I would really like them to at least challenge 1090-1100 on this run. After that, if they cannot get through the 1100 area, I would like them not to pullback deeper than 1070-1040.

Long term trend is up. Mid-term trend is down. Short term trend is up.

OEW pivot support at 1058 and 1041. Pivot resistance at 1090 and 1107.

This is an OpEx week.

Have a Nice Evening!