When support levels get broken, they become overhead resistance at the time markets attempt to reverse course and rally again. Such was the case yesterday, when an initial rebound died around the 1,040 resistance number for the S&P; 500.
It was downhill for the rest of the day, but a pop towards during the last 30 minutes of trading moved the major averages back into positive territory. We’re still in that neutral zone between bullish and bearish territory where a break to either side could occur.
Our domestic Trend Tracking Index (TTI) confirms this current uncertainty in terms of trend direction. The TTI retreated and moved closer to its long term trend line but remains below it by a scant -0.04%. That’s certainly not enough for either the bulls or the bears to declare victory.
We have to wait for further market developments to get a better feel as to whether this buy cycle really has come to an end and that the bears have taken charge.