August 25 Breakout Market Update and Stock Scan

Aug 25, 2014: 12:30 PM CST

Well there we have it!  It’s official – the S&P 500 achieved the 2,000 Magnet target.

We now ask the question “Did buyers use up all their fuel to push the market into this level?”

Let’s take a look at the charts, breadth, and highlight our trending stocks of the day.

I’ve repeatedly stressed the “Repeat Pattern” in the S&P 500 to members (and the open blog) recently and for good reason – the market traded up exactly as would be expected according to the “Repeat Pattern” thesis (it was very successful).

Studying the “Repeat Pattern” that Forecasts New Highs for the S&P 500 (achieved!)

“Onwards and Upwards to New Highs for the S&P 500?

Planning a Breakout (from a Repeat Pattern) in the S&P 500

S&P 500 “Breaks on Through to the Other Side

Decision Point for the Dow Jones

So here we are – either price skyrockets through this level on a “Short-Squeeze,” or perhaps more likely we see a Bull Trap trigger with a reversal down against 2,000.

Note the clear negative TICK divergence which argues for a trap-and-collapse scenario.

Either way, we’ll focus all our attention on the 2,000 index level.

Breadth actually paints a mixed-to-bearish picture:

The strongest sector today – where every single stock is positive at the moment – is the Utilities section (which is not something you’d like to see as the market trades through all-time highs).

Strength is consistent in all other sectors except for weakness in Consumer Discretionary and Technology… which is something else you don’t want to see if you’re bullish at the highs.

It’s simply a non-confirmation signal that “all is not well” with the index value trading above 2,000.

Potential bullish trend day continuation (buy retracements) stocks include the following:

Morgan Stanley (MS), Cimarex Energy (XEC), Blackrock Inc (BLK), and Ameriprise Financial (AMP).

Bearish “intraday reversal” or downtrend continuity stocks include these candidates:

Covidien (COV), Newmont Mining (NEM), TransOcean (RIG), and Peabody Energy (BTU).

Corey Rosenbloom, CMT
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