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Tuesday, October 5, 2010

Tuesday, After the close!!!

It is do, or die here for the bears, a break above this trendline resistance opens the door to a run towards 1219.
After the close, The bulls went on a run and took the SPX to extreme levels today closing right at three different trendlines of resistance, two in the chart right above, and the third in the chart above this one where the long-term trendline is being tested. The only part missing in today's strong bullish move was an increase in volume. The NYSE only traded 1.2B shares today, the same range as it has been printing for the last couple of weeks. Up volume did show a very bullish position accounting for 92% of the total volume.
The count above is still ok, but there is not much room for the SPX to run higher with-out breaking-out above trendline resistance resulting in more bullish signals being triggered. Volume is going to be key, if a break-out occurs with a substantial increase in volume, watch-out as the SPX could be heading up to test the highs of 1219.
Breadth for the day did increase over what has been happening over the last couple of weeks closing at 4.35:1, advancers, this does fit in nicely with a 5th wave, as the 4th wave had low breadth that whip-sawed back and forth between bearish and bullish as the SPX traded in a tight range of consolidation.
A break below yesterdays low of 1131.87 would be the first solid sign on the price chart that the up-trend is in trouble. The Bulls really need to have a strong follow-thru move tomorrow to confirm this move today, other-wise we will be back to the same trend of sideways movement in a trading range.
The Trendfinder is still neutral, which is just fine for me, with the technicals pointing to a top, being in cash is a great position at this time, even though the short-term trend went back to bullish with todays higher high the market is at an inflection point with the risk of a hard gap-down sell-off that is not worth the rewards at this point, it is best to wait for the market to present a clearer direction and a better opportunity for an entry point.

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