Bulls get Benefit of Doubt

Trader Talk

The major stock indexes traded back and forth the unchanged level today, with the stock indexes once again experiencing super light volume.

Officially, the NASDAQ fell 0.2% on 1.5 billion shares, while the Dow Industrials rose 0.2% on NYSE volume of 3.5 billion shares. The leadership profile remains negative, with 54 stocks making new highs versus 220 stocks making new lows.

The short term momentum oscillators remain negative, non-confirming the bullish stance of the AlphaKing Trading Indicator. We have a new trade below.

The bulls are trying to hold support. The bears are trying to keep the S&P500 and Dow Industrials from a breakout above the 50 day MAs. Is the sideways churn over the past month a mini head and shoulders top that is destined to result in a collapse? Or is it a sideways triangle to consolidate the rally gains off the July 15 lows? (Triangles are usually continuation patterns, which means an upside breakout is likely to start the next leg of the rally.) Both are possible, and the battle for the stock market trend is held hostage to that decision. While the low volume and modest list of stocks making new lows tip the odds of victory with the bulls, the fast approaching September/October period has the bear's mouth watering. Tricky times, but a victory answer should land in the non-too-distant future.

Kevin Wilde, Chief Trading Strategist AlphaKing.com.

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