I moved one notch closer to the bearish side today.
Although the market has had a nice run over the past three days, today spent the first half of the day rising, and the second half falling. In fact, although the market closed up almost 2%, It was up over 4% intraday and lost those gains. I think we just put in a lower high and have downside to go from here.
Since the high on 8/31/2011 (9/20/2011 for the nasdaq, but all other indexes haven’t fared as well), we are in a bearish pattern of lower highs and lower lows … It might be time to take out the lows of this decline and go for another downleg in this market unfortunately.
With all this said, my after-the-close analysis of the market showed nothing but short term bullishness (unlike my gut feeling), so it might take a day or two to show in the internals, or my gut is incorrect. Actually I shouldn’t imply it is my gut feeling, but rather watching the price action throughout the day whereas my afternoon analysis looks at closing data and compares it with previous closes. So, we have a contradiction where from yesterday’s close to today’s close we had a strong up day (due to the morning gap), but intraday price movement (from the open to the close) was actually negative.
Tomorrow will be a deciding factor for me, if tomorrow looks strong, then I’m sure I will return to the bullish side, but my gut tells me tomorrow will not look very healthy and we will move down from here.