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The State of the Trend

The daily Sp500 closed the week at a very important juncture where several support levels meet:

A breakdown from current levels will put the recent upswing in jeopardy. Should the SPX brake below the September - October lows, support will likely come in at the 1400 - 1407 level which is the next confluence zone.

As shown in the chart below, stocks have been losing their bullish momentum since the announcement of QE III. As a result, bullish and bearish momentum find themselves at equilibrium right now. In the past, this has often been followed by a period of choppy trading before either bullish or bearish momentum regains the upper hand.

It should also be noted, however, that market breadth is bottoming out right on schedule, and the next cyclical upswing of this indicator should provide a floor under the market:

 

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