Market Update

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The market did indeed fail to breakout above the recent range highs today as it filled the gap at 110.70ish on SPY and touched the recent range high then reversed lower. That may complete this rally attempt right there. The 200 day MA of the S&P 500 is at 1108 just above prices. The Dow did hit that average and then reverse today which now makes a sideways consolidation and 2 failed rallies to the 200 day MA on the Dow since it closed below it. There is further overhead resistance at 1115 on the S&P from a prior unfilled gap down.

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The hourly MACD chart on SPY is the most overbought it has been since prior to the April highs. However, there is no bearish divergence on this move up, so we may need to see another attempt higher with some divergence before the market breaks down. Of course the market could power higher and breakout, but right now, I don't think that will be the case.

Just to step aside, I want to make clear that there are quite a few reasons why I believe that the market is on the brink of a very large fast decline. In short stay bearish as long as the S&P continues to close below 1115. What I expect is that whatever rally attempt the market has left, if any, will occur this week, and then it will come down hard for a couple weeks after that. Based on correlations and price formations I would expect this to occur with US dollar strength, Japanese Yen strength, US Treasury strength, oil price weakness, and I'm not sure about gold.