All last week I mentioned the fact that the market would face resistance as it moved higher, and yet it continued to appear top grind higher. Friday's down day is healthy. A distribution day in all 4 market watch by my charts but the volume is marginally higher and the prior day's volumes were extremely light so it's noteworthy but not serious.
More important is the fact that if you look at the 60 min charts you'll see that for all practical purposes the all but the DIA have basically consolidated since about noon on Thursday. So the resistance is taking hold where we'd expect - at the three negatively stacked daily MA's (10, 20 and 50), and at the daily trend lines from the 9/20 high.
In order of importance, the 9/20 high trend line is an accelerated, and it lines up with some of the daily moving averages so if the markets were to fail hard here it would be a sign of more serious weakness. If the markets rally up to the trend lines from the 9/1 highs that would demonstrate some nice strength. There isn't a 9/1 high trend line in the Q's so I'll consider the 200 day MA its equivalent hurdle.
The IWM is again demonstrating the most weakness and is the only index with a negative pivot stack. If it leads on the down side do not ignore this weakness. Use S1 levels as the bias shift as we do for all the other positively stacked indexes, in all three this will be just under the prior day's low which is also a very key number for tomorrow.
With a day and a half of consolidation at the moving averages and the trend line, it is a good possibility we'll see a trend day in either direction so the intra-day key reference points (pivots and prior day range) are going to be important for breakouts and reversals. For breakouts I'd focus on stocks that have consolidated, reversals on those that have not. But more important than my expectations, is your discipline to follow the ORSF and DTHS trading rules.
Focus List Long
ORLY
ANF
UNP
Reversals
DECK
AMZN
KMB
CELG
IBM
CMI
PAY
TPX
Focus List Short
OPEN
GD
NFLX
BTU
IDCC
CF
CMG
