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Daily Analysis

I am sorry but today I don't much time to devote to the daily technical update, so just a brief comment.

Disappointing reaction of the financial markets to the € 100 billion Spanish "banking system" bailout.

Huge initial openings gaps in the European indices were closed by yesterday's eod, leaving bearish candlesticks across the board.

In the US, with have a bearish a Shooting Star in the SPX and the DOW and an Engulfing one in the NDX.

This kind of price action, which resulted in a rejection at the critical resistance of the May 29 lower high is now a concern and could result in the resumption of the down trend off the April 2 top.

But as I discussed in my last weekend update market Momentum & Breadth indicators are suggesting that a "relief rebound" off the June 4 lod should have more "legs"

For this reason lets monitor the McClellan Oscillator. Both the zero line and the bullish cross of short-term MA should provide clues regarding the validity of the short-term bullish scenario.

NYSE McClellan Oscillator

In addition, time wise if price is involved in a retracement of the EWP from the April 2 top so far the bounce is too short.

We have to deal with a "crazy" tape, a lot of noise and headline news. One day we have a bullish pattern while by the following day we have a bearish one. And ironically if today price has more follow through to the down side without breaching the 200 dsma it could be shaping the right shoulder of a bullish Inverted H&S with a potential target in the 1400 area.

SPX
Larger Image

Therefore as I discussed last Sunday, BUT as long as SPX 200 d MA at 1289 is not breached and we don't see a deterioration of breadth & momentum indicators I will maintain the idea that price is unfolding a counter trend wave (B) rebound with a potential target in the range 1344 - 1353.

For the immediate time frame yesterday's bearish Shooting Star is suggesting more down side action. Price is still above the critical 10 d MA = 1306, if it goes then we have the 1300 area as the last support above the 200 dsma.

On Friday we have Quarterly OPEX, then on Sunday Greek Elections and next Wednesday the FED will "speak."

 

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