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#Market Comments for August 7, 2014

 

There has been damage done to the daily chart but with the amount the market has fallen already the gap down was bought yesterday. This did not really halt the selling that has driven the market down over the last five days. The gap down was bought and the market rallied for the first half of the day. The second half of the day saw selling which showed up as a topping tail leaving a half green bar half topping tail sitting on support. The market has continued to have lower lows and lower highs on the daily bars over the last three days.

Although the stall at support may cause a bounce, prices are entering an area where it is likely that the daily chart will fail to challenge the prior high even if we do see a bounce for a day or two. The area at “1” (“3” on the chart of the SPY) remains a significant area for the Bulls, and their first job is to hold above yesterday’s high, which is also a significant area on an intraday basis. The SPY was similar although the overall pattern is a little weaker.