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Market Comments for July 18, 2014

 

Yesterday the market left a solid red bar on the daily chart which left a very similar pattern to how the market looked eight days ago. This pullback has not broken the daily uptrend, but it has posed a couple of interesting technical questions. First of all, the SPY never made a higher high on the daily chart on the last rally. While the QQQ made a new high, it was barely a new high.

Second, this is essentially a one-day pullback and it is already at the typical stage II support area. Unless prices see a reversal of yesterday’s red bar sometime today, there are indications prices may be seen some slight weakening. This weakness may be an indication of a necessary period of time which would follow the exceptional run prices had over the last 2 to 3 months. Weakening on the day daily chart could lead to a weekly chart pullback if we see prices continue lower today.