Markets bifurcation were on clear display this week as the two big benchmarks I like to watch the Nasdaq and S&P 500 are telling different narratives. It was small but has been continuous for sometime now as the Nasdaq gained .2% this week, and the S&P 500 lost a little more than 1%. It now has almost a “touchdown” percentage lead over the the S&P 500 with a 25.2% YTD gain. The S&P 500’s 18.6% has a respectable gain in 2013. We will say the Nasdaq missed the extra point somewhere along the line. The Nasdaq appears to be in the “red zone” with its chart as it looks good maintaining its flat base breakout pivot of 36.95 from 9/9. The S&P 500 however looks injured at best as its 1710 cup base breakout 9/18 looks now like a false one. To have such a move downward after a clean move through that pivot on good trade I may add is disconcerting. But it is still recording higher highs and higher lows since the spring, and its 50 day SMA is just below. That moving average did not hold the last two times it was tested in June and August so I would be surprised if it did this time. More likely it will return to its lower trendline near 1670. Problem is this channel is narrowing and has a bearish rising wedge developing. A break below that could start a reversal pattern much lower. Good news is that technical analysis is not an exact science, they just alert us to high probabilities. However some secondary indicators like sentiment seem to inversely bullish. This nice note posted by @RyanDetrick was a good read http://schaefferstradingfloor.com/is-the-us-headed-in-the-wrong-direction/id=6412. There does seem to be a lot of pessimism in the media and on streams. As always let price action be your guide and trade accordingly.
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