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Right to the charts. SPX looks to be starting today with a gap down(as of 7:25 EST). This gap will take SPX near its June lows and May lows which held during the last market decline.
There is a lot of chatter about the H&S pattern forming, I am skeptical of this pattern since its so obvious that it might happen. The move right now looks like the June 22nd move where it bounced right off 896 and climbed.
On the SPX hourly chart, it is in some deep oversold territory. CCI's and Stoch are in oversold and RSI has dropped below 30.
There is some caution flags going up if you bearish/holding short. One is that the market is nearing previous support levels that could provide a bounce. Another is the oversold condition on the hourly basis, but other indicators are giving signals that the bearish trade is getting crowded out.
TRIN was very high on Thursday going above 2.00
There was also a good amount of put buying on Thursday
It's pretty plain and simple, bulls need the May support to hold, bears need to break it. Watch out for this battle it will be fun.
There are some other sectors that are looking nice for a bear attack though.
$DJUSEN (DIG and DUG) has formed a nice bear flag, which could end around 370, BUT!!! just like the overall market $DJUSEN is right at its support so 410-400 needs to break for the flag to be completed.
$RIFIN (FAZ and FAS), is currently in a downtrend making a descending triangle. The key support levels for these stocks will be if $RIFIN can break 600. This would be a break of the bottom of the triangle.
So as you can see, the market is right at its support levels, the bears have control right now but the bulls could easily wrestle it away at the support levels. Today watch for a gap down and possible gap fill.
