Where’s the beef?
10! That’s the number of weeks the markets have been in this Aug-Sept sideways whipsaw channel. On Friday, with the bullish daily and weekly close, this came to an end as the three eldest sisters (DJIA, SPX, NDX) all bested the topside; leaving the youngest continuing to fend for itself (Russell 2K). As we’ve stated over the last month, by no means does this imply the bulls are out of the woods and “Off to the Races.” (Review 10/10/11 & 9/19/11 for specifics on this topic).
Our main technical premise of the “it’s not over” opinion is volume. The only decent “Positive” volume day – above average volume as the indices close higher - was on the 10/04/11 Reversal Bottom. From then there’s been no true conviction (beef). This leads us to believe the markets are closer to a short-term top than a bottom.
SPX Daily
Another technical factor we at TAM have been discussing since the July breakdown from the 2011 Channel of Indecision, is the lack of retest of the neckline. Typically, after a break has occurred, the area is retested to ensure the break’s validity. This has not yet occurred and would require the SPX to continue its northbound move to 1,275; right around its 200-DMA (Day Moving Average).
Out of the 11 Cyclical Bull to Bear market shifts (within a Secular Channel) over the last century not one has made this transition without first retesting and confirming the break. Not to say with absolute certainty that it must, we’re just saying…
We hope this finds you well.
TAM-KAT