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Market Comments for August 1, 2014

 

Yesterday the market gapped down and left a large red bar on the daily chart. This is the third large red bar and similar to the prior two that have occurred in the month of July. The prior two were quickly overcome as the stage II uptrend continued on the daily chart. This one is technically different. The likelihood that a congested sideways daily will begin or the possibility of the daily chart downtrending is the likely result of this red bar.

The weekly chart of the market is still in a precise stage II uptrend but somewhat extended. A probable support area would be somewhere between 90 and 92 on the weekly chart (3). It is likely prices will see the daily chart conform to the weekly uptrend at this point. If it does support areas at ‘2’ and ‘3’ will be short lived. The similar area in the SPY is round 189.00. The SPY has had a weaker uptrend and will reach that area much quicker. It also had a more bearish day yesterday. Between the more bearish day today and the weaker uptrend the SPY has ready broken significant support levels.