I've been charting the action since early June mostly via a chart connecting a series of higher highs and higher lows. Using that approach the market broke out above the top of the higher highs middle of last week – only to fail. Another way to look at that time frame is as an upward channel. What we can see is there have been 3 iterations of violent moves up and down since early June. It has been a failed trade to "buy a breakout" at the top of said channel, OR to "short, assuming a breakdown" at the bottom of said channel. Until this time.
Note unlike the previous two iterations the S&P 500 did not get to the top of the channel and began selling off earlier. Also note what has transpired the past 2 days. The index reached the lower end of the channel and this time fell through. That has been the failed trade the past 7 weeks, but correct one this time. Now we've gone up to touch the bottom of the channel and rolled right back over today. That is a disconcerting signal.
Of course this market has been so random in daily direction what would be the most typical is Apple causing a gap up tomorrow morning up back into the channel just as every technician notices the breakdown happening! But outside of that, the action has quickly turned from constructive to troubling.
In terms of where things stand, once S&P 1338-1340 broke this morning the index quickly flushed down. The longer it stays below those levels the more troubling the near term could be. Again, Apple can rip this market +2% tomorrow and we'll be back to square one. But also keep in mind we still have a gap to fill in the index from June 5th/June 6th and those usually fill within a few months.
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