Tale of 2 tapes

Going back to Wednesday’s forecast, it appears the $COMPQ is behaving as usual at this point, deciding push a little past it’s 1st gap target.  As of today’s close, we cannot eliminate the upper target from consideration.  A decline below 2350 would be a good sign wave 3 is coming.

The blue chips continue to lag the NQ indexes, though they managed to rally 2.5% today also.

For both the $SPX and $INDU, the level I would need to see broken is the 7/28 low, 1234 in $SPX and 11125 in the $INDU.  If all of our other indicators signal that wave 3 is here, the price level will not be relevant, but until those stars align, we will be holding with our “control points.”  Both of the blue chip gap targets remain in place at 1322 in $SPX and 11811 in the $INDU.  There are larger retracement targets if needed, but we certainly don’t want to jump the gun against the larger trend.

Let me finish by explaining my title tonight.  On Thursday we had almost completely reversed Tuesday’s advance in breadth on slightly increasing volume.  While not retracing completely in price, this was still a good sign of the 3rd wave.  However, today’s advance reversed yet again, leaving us with a frothy taste of bullish ravinous in our mouths. One of today’s silver linings is that this advance, while undeniably strong, was done on decreasing volume.  That said, short term remains mixed, while long term trend remains down.

I don’t expect a whole lot out of next week, and I certainly don’t want to get my hopes up, due to options expiration, but expiry days have been known to spark some major moves.  It will be an interesting week…hopefully. 😉

Skol