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The markets, slightly bearish and sloping toward technical ambivalence, have to be monitored closely until this oblique action becomes clearer. Over the last month we’ve discussed the break, the retest and the beginning of a second downturn; now it’s a matter of follow-through. Watching for this for this turn not only requires following the secondary indices discussed last week, but tertiary trends lending support to the secondary and primary. Today we post the SPX and NDX on a 60-Min basis.
Once the SPX broke the last short-term trend run-up 1,305 became its tertiary support. The index is now caught in-between 1,330 and 1,305; until resolved there shouldn’t be much in the way of exciting action. If this begins to look like it will be resolved topside it is likely the formation would be an inverted Head & Shoulders and would play well into the bulls’ hands, but it’s way too early to call.
The NDX seems a little more bearish and is fumbling with a short-term floors & ceilings going back to the beginning of the year. If resolved south it’s likely the other primary indices will follow. Conversely, if the downtrend (beginning at 2,360) is taken out we would look for a potential gap-fill around 2,380.
Whichever the play, as your mother always told you, be prepared and wear clean underwear.