The call for this week: My friend Jason Goepfert, captain of the must have SentimenTrader, writes:
Stocks have reversed the past five weeks' worth of gains. After trading above its prior high close from the past 52 weeks this week, the S&P 500 reversed enough to close at a 5-week low. It wasn't nearly enough to qualify as a "shock," but it's still unnerving to many investors. Reversals like this; when stocks reverse weeks’ worth of gains after trading at a high, rarely lead to major trend reversals. [Moreover] there wasn't a big spike in buying climaxes, either.
To which I would add, despite the 5-week low the S&P 500 hasn’t really moved a whole lot since mid-July. It is worth noting that last week the SPX “lost” the 2175 “pivot point” so often referenced in these reports. If that level is not recaptured quickly it suggests a test of the August 17 intraday low at ~2168, but more likely a test of the August 2 intraday low of ~2148. And, slightly below that is the 50-day moving average at ~2145. Further, last Friday was an “outside day” (higher high and lower low than the previous session. That implies there is a decent move coming so stay nimble as we have done since our model called for a short-term top.
