Break Points

The reason I've yet to be convinced of a lasting top is evidenced by the following two charts. Until and unless their respective lows are taken out (the June lows in the S&P and the March 2012 lows in the 10-year), there is still a possible topping pattern in play that I alluded to yesterday: a rising wedge.

The main concern at this point is the Dow which is the weakest of the major indexes, having just smashed through its 61.8% Fib level. This level is 1617 on the S&P.

The NASDAQ and the Russell 2000, however, look much more suggestive of the above scenarios. So until and unless the June lows are violated in all the major indexes I am still allowing for a bullish outcome.

That said, the market is repeatedly showing that it can't bounce. A market that can't bounce when oversold is a market that can crash.

Futures tanked to 1631.50 last night before magically levitating in the overnight session. Just as my friend Sean McLaughlin @chicagosean correctly called foul on the market making a lasting low based on the Fed minutes yesterday, I rarely trust "trends" that develop in the overnight session.

The market will have work to do just to get over 1656.99. The post-Fed upthrust failed to best 1658.92 to break yesterday's wedge. I have my doubts this morning and would not be surprised by a fade.

The market is back to cheering bad news such as a rise in jobless claims. This is pathetic for a market to be so addicted to stimulus after nearly 5 years.

If a rally gets going, I like the 1660-1665 area for starters.