The stock market is slightly – only slightly, off its recent highs.  As expected, breadth has contracted but not exactly in dramatic fashion and just enough that the indices could be yet another low prior to another run a higher highs. But the most significant high since the June low could be in place, too. The reality of trading is that we have to almost always, at least in real time, deal with ambiguity.  The indices are approaching downside KRAs that are important on an intermediate term basis. My best guess is the indices have at least a bit more downside even if they are going to turn on a dime as they have been doing for months now and rally back to higher highs. If the S&P reaches the 1679-1671 KRA we will assess the outlook at that time based on how it got there and what the internals look like. In the meantime, based on present info, I am favoring the short side of the indices.

120 S&P Breadth