Courtesy of Brian Shannon at AlphaTrends
Trendlines and Support Levels
continue to be tested in the major averages and each test weakens those levels as the buyers lose conviction. We are not seeing re-emergence of the primary downtrend on longer timeframes yet but this action should give bulls reason for concern. To me, the most impressive sector today is the action in the financial with yet another rally from the trendline. Impressive as it may be, a failure of the trendline to hold will likely bring about a quick test of the important support in the 1115-11130 area. Markets are pausing and it seems like most people are looking for an outright collapse, maybe we just drift into the long weekend from here? Keep an eye on those 5 day moving averages (orange) they will become a likely level sellers will defend on any rallies. Nimble remains the best approach, particularly after today’s gap lower.
[click on chart for larger view]
