S&P moved down to test key support at lower boundary of the pink band after the late June rally ran out of steam near the lower boundary of the red band, or extreme overbought zone. Market internal deteriorated following recent decline, suggesting the path with least resistance is lower. S&P’s 4380 is the line in the sand. If the market is going to find a bottom in the near term, we want to see the S&P stabilizes near that level. A failure to hold above it indicated that long-term buying pressure has been exhausted and a much deeper pullback should be expected and we’re looking at the trend channel moving average, currently at 4250, with the possibility of a major correction to 4200
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