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Market Comments for September 17, 2014

 

It is never surprising to see a bullish day in this market over the past five years. For the vast majority of that time the bulls have been relentless. Yesterday the market left a wide range green bar on the daily charts. This completely reversed a lot of bearish activity over the prior days. The daily chart of the QQQ and SPY look somewhat different. The QQQ had a wide range breakdown bar on Monday which was almost completely reverse yesterday by a wide green bar. The SPY was not bearish on Monday, so it’s green bar yesterday eclipsed the last five trading days. The end result is still similar however, as the daily charts before yesterday were in similar positions.

The QQQ is not out of the woods because it has a difficult area to overcome above it, and the SPY, while closer to prior highs, still has a job ahead of it. It also has to be remembered that we have seen a lot of sloppiness in the market over the last two weeks and this bullishness yesterday could still be more sloppiness inside of a wide consolidation. Follow through today is critical for the bulls, at a minimum they need to hold a narrow range bar in the upper third of yesterday’s trading range. Anything engulfing more than half of yesterdays green bar means we may still see support areas tested on the daily chart at a lower level.