Technically, the Dow moved slightly past its resistance levels from June, but could not close above them. The S&P and Nasdaq continue to stay below their resistance levels as well but are very close. The numbers to watch (and I think everyone is watching them) are 1131 for the S&P and 2341 for the Nasdaq. The Nasdaq still has resistance at 2307 and that is more of an important level for the Naz this week. I get the sense that a lot of traders are expecting a breakout here and it will be interesting to see if it holds in this ultra-thin August environment.
I pointed out last night in the video that a breakout followed by a reversal would not be surprising here, and I still hold that view. If you look at both main indices, a bearish wedge can no doubt be seen on their daily charts, with resistance being possible around 1140 and 2355 on the S&P and Nasdaq respectively. The 1140 number in particular is one I am watching because sticking with the theme of screwing as many traders as possible, a breakout above 1131 would like bring in many buyers and a false breakout and reversal at the top of this wedging pattern would certainly frustrate many. This obviously isn't a guarantee, but I think it is certainly a possibility this week.
Chart from Telechart, Courtesy of Worden Brothers, Inc.
I made no moves today and remain mostly in cash. There were stocks moving higher today (EBIX and CNAM were posted last night and both were up more than 5% today) and those that didn't basically just consolidated another day. I still have those on my watchlist and will continue to look for long possibilities - I am just not jumping into a bunch of stuff here willy-nilly, that's all. My numbers remain bullish and if the market breaks out and holds it, that will be a very good sign for the rest of the summer into fall. For some reason, however, I just sense that in this low-volume environment, it's more likely that we get more chop rather than a nice, smooth breakout that takes us much higher. We'll see what happens. Stay agile and stay careful, as it still is a tricky market. Good luck Tuesday.