Wednesday, August 12, 2009

Morning Briefing for August 12th

We have pierced important support around 990 in the ES contract, but found good buying there and are currently trading back into the multi-day trading range. I will be watching closely to see if that 990 area can hold support. A sideways correction would be positive for market bulls, similar to the corrective action we saw during much of May and June. A drop below support at 980 and especially below the 965 support would suggest a topping process of more significant potential magnitude, especially if it is accompanied by very weak market breadth. Holding the 990 support, conversely, would suggest more of a rotational correction, with fresh high prices likely to lie ahead. Upon my return, I will track sectors and secondary indexes to determine whether the corrective behavior is more rotational or the start of a shift in trend. For a further look at the market's recent action, check out my previous post.