These observations are from my trading notebook. They are in no order of importance. Each observation is simply that -- an observation.
- Bad week. The market was down as a result of concerns over Bear Stearns hedge fund issues. There was also a lack of economic news.
- The SMAs are either neutral (the 10 and 20) or still positive (the 50 and 200).
- There is support at the 149 level above 1% below the current level.
- The market closed slightly below the 50 SMA on Friday.
- Volume was heavy on Friday and the market lost some ground. This indicates traders are nervous about the market because they don't want to keep positions over the weekend.
- The market may be forming a double top, or consolidating in a triangle formation.
- Short interest is at a record. This is considered a contrary indicator.
- OBV is neutral, and has been fluctuating between 4.25 billion and 4.75 billion since early May.
- CMF indicates money is leaving the market.
- Breadth charts from Stockcharts.com are neutral or negative
- Daily MACD has been declining since early May
- P&F is a high pole warning, but the underlying volume total for this is about 1/3 the size of the latest upswing volume total.
Short version -- There is strong technical and fundamental evidence the market is either consolidating or correcting. The volume indicators aren't showing a massive exodus from the market. If this were the case, the OBV vould be turning negative to confirm the CMF number. The volume figures are showing people taking profits off the table.
