Bounce or Breakdown Market Update for Oct 10

Oct 10, 2014: 1:53 PM CST

Price continues to trade within an intraday downtrend as the sell-phase continues.

There’s a clear pathway developing, but no guarantee price will follow it.

Let’s chart the pathway and highlight the top trending stocks of the session:

Today we saw a (near) test of the 200 day SMA as I highlighted in this morning’s update.

Beyond that, we’re still in this game-planning mode of “Will the market repeat an intervention pattern or will this time be different” which frames our short-term strategies in this broader context.

Nevertheless, the intraday pathway is lower but price is testing the lower boundary of the falling range.

This would suggest – at least short-term – that buyers could rally the market again toward the falling upper trendline near 1,960.

However, a touch of additional selling could collapse the market straight down – even after all the selling we’ve already seen (reference July 2011).

Sector Breadth – like price – is showing additional bearish indications:

Our strongest sectors of the session include the defensive Staples, Health Care, and Utilities.  Strength in these sectors suggest strong bearish money flow.

Weakness has developed in Technology and Materials – and the other Offensive sector names.

Very aggressive traders may look for a reversal and to play bullish stocks into the close:

HCP, Venas (VTR), ICE Exchange, and CME Group.

We could our attention on bearish stocks (relative weakness):

Juniper (JNPR), Xilinx (XLNX), Symantec (SYMC), and Qualcomm (QCOM).

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Corey Rosenbloom, CMT
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