We got a decent sized selloff today but it could have been worse. The bulk of the losses came early in the session and then it was a tug-of-war for the rest of the day. But the sellers were able to do a bit of technical damage by breaking the S&P’s March trendline. It’s continuing to cycle of breaking a trendline then chasing the broken line up to make a new high thereby forcing a new trendline only to break that one. The result is the fanning out I’ve discussed before (and that Nick at DTT wrote about the other day).
The Nasdaq was able to hold above that 2575 support area. It’s worth noting that its March trendline is in that vicinity. So that area is becoming even more important.
The Russell looks pretty similar to the Nasdaq except that it’s a bit further away from its trendline.
Some downgrades to the short term trends due to 10 DMA breaches and touches.
| Trend | Nasdaq | S&P 500 | Russell 2000 |
| Primary | Up | Up | Up |
| Intermediate | Up | Up | Up |
| Short-term | Lat(-) | Down(-) | Lat(-) |
(+) Indicates an upward reclassification today
(-) Indicates a downward reclassification today
Lat Indicates a Lateral trend
Mike- How many games will the Cavs win? My prediction 4-1 Spurs.
I think the same or maybe even a sweep for the Spurs.
Mike,
Just curious as to if you consider this consistent breaking of the trendline to be the formation of a top. I know a lot people say the market has room to run, but the slowing of the market seems to indicate that it may want to take a little breather in the summer, possibly correct, and the resume an upward trend later on. I know it’s forecasting but I’m just curious as to your thoughts. Thanks!
Bryan,
It clearly shows a lessening of momentum. I wouldn’t use the fanning to call a top though. The last time I showed similar fanning, in early 2006, it only preceded a minor correction.
I’d look for some of the classic patterns, like a confirmed double top or a head & shoulders if I were going to try to call a top.