As I write this the stock indices appear to be putting in a “V” bottom following the sell off that began (and ended) in Globex. In the S&P cash, the decline from Friday’s top tick to the low that occurred on the opening pint, involved a 1.2% retracement. In the ES it was 1.88%. The bottom line is that the decline has been, so far, extremely mild in terms of retracement and extraordinarily short in terms of time.
Breadth, which we suggested was overdue for a “breakout”, opened at – 2000 and has persistenly crawled higher since, presently sitting at a benign -892.
The market is a product at the moment of itchy fingers: it remains incredibly bid and buyers are afraid not to buy any dip. Recent party-goers are nervous money and quick to hit the offer, thus we have a battle at the moment that based on the path of least resistance the bulls seems likely to win.
Watch Breadth on the short term charts this afternoon. It is rare to have any decline of significance with 1) Breadth trending higher and 2) Breadth above -1500, both of which are presently occurring.
