Technically, we continue to establish a new trading range here, with the key being this range remains under the support from previous weeks. I discussed this in the weekend video - until the market gets above these former support levels (again, 1067-1069 on the S&P and 2155-2160 on the Nasdaq) there is not much reason in my opinion to get bullish. The 9 day moving average continued to hold stocks down today as well. If a breakout above these levels comes soon, then it could potentially be bullish, but right now the past week looks like a choppy, bearish consolidation pattern to me.
Chart from Telechart, Courtesy of Worden Brothers, Inc.
I personally would not mind another day or two of low-volume, slower action within this range, and perhaps one more test of the upper levels, as I am starting to see some shorts setup in my scans today. If the market can move back into overbought territory this week without breaking out, I will be looking to act on some of those shorts. IF we happen to get above this range, I will reevaluate things, but remember, there is several layers of resistance above 1067 and 2155 as well, so it's not like things will be easy for the bulls.
We may get a positive bounceback tomorrow with end of month window dressing, but the longer we stay in this area without moving higher, the more likely it is in my opinion that the market breaks last week's lows and tests its July lows. That's what I am expecting as of now, but if things change, so will I. Good luck Tuesday.