The bulls had a chance to break it out today and failed, but thankfully on generally light volume. The daily charts look horrible - I mean really horrible. If the short term daily chart was your only reference point, you would have to conclude that the market is getting ready to fall hard. But the daily chart is not our only reference point as I showed in my post this morning. The number of technical buy signals are beginning to pile up. The RSI 14 rose above 50, the MACD is on a buy, and today I got a PSAR buy signal for the Dow and SP500. It is rare for the PSAR to reverse immediately to a sell signal after 33 days on a sell signal. We also have the Euro rising from a positive divergence MACD buy signal that is not likely to fail near term which is supporting the market. This leads me to believe that my current view that we will chop higher into July is accurate.
However, it looks like we could see some selling tomorrow, but we should see a turnaround by mid-day Wednesday at the lastest if we are going to break out above the 5DOR for June. Once we see that breakout, the market should advance fairly quickly to the 1160 to 1170 level in the SP500.
If we fail to break out this week and sustain a close above 1105, I will be looking to get defensive against another selloff into Friday June 25. I don't know exactly how I will do that at the moment, but put options are a possibility. The last 3 days of June and the 2nd quarter will likely be positive so next week is the biggest concern.
It is going to be one day at a time until this market tips its hand one way or the other.