The US Stock market as represented by the S&P e-Mini Futures has had a strong rally off the August 2nd lows. The very high volume on that day indicated a lot of selling, but also quite a bit of buying, too. We see this by the position of the close.
The next day shot up and broke above recent highs at 1387.50. The lows of the next two days held this level, but I wonder if it has really been tested. It’s a question only the market can answer, but it is a good first level for a pullback.
We see that after three days of upside progress, today closed off its highs. Some selling came in during the afternoon, though not at a rate that signals serious market weakness. Still, we see the potential for shortening of the thrust as the last up wave on the intraday chart has shortened (blue arrow).
There is momentum to rally another leg higher, but we may see price begin to stall soon. Watch to see how price on the next wave or two up acts. If price has difficulty moving up freely and volume is light, we can expect a pullback soon.
As a side note: I’ll be heading to Singapore, Malaysia and Australia in September on the International Chart Reading Road Show” with my good friends at TradeGuider. We had outstanding events in Chicago and London. I’ll post more on this over the weekend.
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