The picture of indecision

Compare the long wicks on the last six trading days of the SPX compared to what came before -- the picture of a battle between the bears and bulls. As we've written in the newsletter in the last few days -- sentiment/momentum is not sufficient any longer for a meaningful break-out as the up-trend has waned. This means that the only thing that will move the market out of the range is significant fundamental news. As long as this tight range continues we're shorting resistance and buying support.

Market Talk

There's still 90 minutes to go before the close but we have our SPX break-out and commodity stocks are going bonkers. But we expected better action and volume for this break-out and can't help but to be disappointed.

A lot of tech is still red with GOOG AMZN BIDU BRCM SOHU all negative as we write this. What kind of break-out is this? Not to mention IYR has been negative all day, and GS has been going in and out of the red zone all day.

A low-volume commodity led rally without tech participating is not a healthy break-out.

A couple of things would get us more bullish: a strong close today, and most importantly, tech participating tomorrow.

But for now all we can say is Meh.

Market Talk

The effect of the 10 year auction results today show how focused the market is right now on the bond market. This is probably the most important thing (along with USD attempts to rally) holding the market down.

We didn't get duped by the market gap-up this morning to break-out levels. Why? Because of what we wrote last night in our newsletter in regards of a break-out in the SPX:

"Key factors that have to confirm will be volume (which has been lacking lately) and breadth ( you don't want the SPX to break-out without the financials/REITS participating)."

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Today both conditions failed miserably. Sit tight, chill, get a drink. This isn't the time to make any bets until we get a more clear direction.

Market Notes

The SPX seems tired with some of our lead "tell" stocks such as AAPL GOOG BIDU acting exhausted. We're in a tight consolidation pattern in the S&P 500 (still in the same zone as the SPX chart we put up yesterday) and our game plan here is to take it easy until we get a better edge.

Our thinking is that we're not going to be leaving this range without some kind of fundamental news as technically the major indices look like they're low on juice.

As we wrote last week we seem to be entering a more difficult market (at least personally speaking for our own PnL). Expect more of the same until the range breaks (923-952). A break-out of SPX 952 would probably take it to 1000. A break-down of 923 would take it down to the 20/200 SMA around 915 and if those did not hold, then the 50 SMA around 880. Consolidation over SMAs and under resistance is considered bullish.

Conclusion: sit tight until we break the range -- after that most likely there will be better opportunities.

Market Talk

Very impressive come-back and the consolidation looks good here for a trip to 1000. One wild card is the USD which has been trying to make a stand since last week. If that occurs, we could see a more significant pull-back, but until then enjoy this rip-roaring bull trend.