The upper trend continues to offer resistance as Thursday’s action shows. Volume has picked up slightly in the last few days. I expect we will trade sideways for the rest of the week as we enter September and the Labor Day holiday. While September is known as a historically poor month for the market, it seems everyone is now focused on this potential event. All this attention means tends to indicate the event might not happen at all. However, we will get a better idea when the pros return after Labor Day. We just have to be patient.The RSI is below 50, a sign of a down trend. The MACD turned down through the 9-day moving average, giving a sell sign. The Slow Stochastic is above 80, where it will eventually turn down giving a sell signal.
We have experienced a 50% rise in the S&P 500 (^GSPC: 1003.24 0.00 0.00%) since early March without a significant move down. That in itself is an unusual action. Based on a variety of factors, including the ones presented here, I am expecting a move down that will begin in the next several weeks.
Link to current version of the chart prices: S&P 500 6-month chart.
The 60-minute 3-month S&P 500 shows how a rising wedge, a bearish formation worked as expected. The lower rising trend failed as the price fell through the support level. We might get a back test of the lower rising trend, which will give us an opportunity to add further down side protection.The RSI is below 50, a sign of a downtrend. The MACD is near a low point where it will turn up giving a buy sign. The Slow Stochastic is below 20, where it will turn up giving a buy sign. These buy signs might lead to the back test mentioned earlier.We received a short-term sell signal, though I do not believe this is the beginning of a big move down. More likely, we will see brief pullbacks and then small rallies as the trend goes sideways for this week.
Bond traders are often considered better investors than those trading stocks. Many stock traders monitor what bond traders are doing to help them understand what risks they might be facing.Rates fell again Thursday as bond prices rose again. They are testing the 119-resistance area. If they break through, it is one more sign that some investors are moving their money into bonds to reduce their risk in case we see a move down in the markets.
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