The entire month of July had not had a 30 point decline in the S&P futures as of Monday. We closed on the first day of July at approximately 1606. The only way that a market can act the way this July has been, is by incredible manipulation. I personally do not understand why it is so critical that the stock market be held at this all time high numbers. This is a bubble of bubbles and reminds me of the summer of 1990, just before Iraq invaded Kuwait. The market was slow, volume was light, and then a monumental reality hit. Once again we have gone another day without a 30 point down day. Is one of the greatest manipulated months going to go out without a significant drop? Tuesday was down 11 points, but that is no relief for a bubble that is about to burst. We had 3 print highs on 3 successive days at 1694.25 to 1695.50 that marked the all time highs for the S&P. Keep this in mind as today we saw a push into this area but it took an incredible amount of energy to fulfill this movement. The question is will the reality of the resistance quell this assault or is there a push that defies gravity?
Wednesday's lows in the bonds have all the look of a short term bottom. The spike low represented a fall on a news item that was not retested. The result following the lows was a V bottom taking bonds to plus numbers on the day. It was also accompanied by the highest volume we have seen in a considerable amount of trading days. Therefore a push to the old resistances at 136 could happen since the shorts became trapped and also monies will be pulled in from the sidelines.
The S&P was literally pushed above 1700 Thursday and the tick was not showing any signs of institutional activity. We never saw a plus 1000 tick in a day that took out the all time highs which should have generated a high plus tick. I have seen control but this is getting ridiculous that no free market is allowed to exist anymore. The big picture needs to constantly be reviewed. This was the 1st trading day of the month which generally has some influx of cash. However we are closing above the all time highs but once again with deteriorating internals. I had mentioned previously that some clarity should be forthcoming shortly. Will the massive buy computer be allowing this to occur?
Into the 2nd trading day of August, there was a 150 point rally without a 20% correction equating to one of the most overbought situations ever. The Fibonacci retracement that is only 38% which would be approximately 57 points would only take this market back down to the 1645 area. The big picture calls for a 50% retracement which would back off prices to the 1625 to 30 price area. We are into a historical precedent and keep a diligent diary of this market.
The employment number released Friday morning created a rocket ship affect in bonds but was very benign in stocks. I do believe that certain price numbers have become magnets pulling them to these numbers. The 1700 area has been a magnet that has increased the otherwise wide move to an extreme. I mentioned this morning that we have seen 150 points upward without even a 20 point correction let alone a 30 point down day that is seen as common place even in bullish moves. This is the second trading day of the new month and money is not flowing into stocks. Therefore the big picture does seem to be losing its energy and until we close under 1670 the uptrend is still intact.