Skepticism Grows As Pull Back Extends To Day 3

$SPY is pulling back for the third day in a row into a rising 20 period EMA on the daily time-frame but the trend that started in February is still firmly in tact. We’re looking at hourly charts below and I want to point out the importance of this 208 level in the near term.

208 was Friday’s lows and we undercut those levels this morning and then quickly pushed back above it heading into the lunch hour. That is constructive, and something we’ll be watching closely into the close to see if it can hold.

To us, it’s the closing prices that matter.

If we lose 208 then the next point of interest is the 207 pivot low from April 18th which coincides with a re-test of the 20 EMA.

It’s at that point that bears really need to go to work before they’re allowed to get excited, otherwise we’ll simply have another pullback into support that successfully holds.

As far as market internals, they are notably weak today and are supportive of this move lower which is the opposite of what we saw last Friday.

To stir the pot even more we have a boatload of earnings coming up and an FOMC meeting this Wednesday.

There’s a lot going on that makes the near-term direction very difficult to call. To me, the growing skepticism and constant searching for a market top by the majority makes me believe we’re still not there yet.

$IWM still very quiet here in the small cap stocks trading quietly sideways near recent highs. Bullish action until proven otherwise. 112.80 – 114.

$QQQ suffered losses last week after some big cap tech earnings misses but so far it’s still holding onto some important support around 108. Stabilizing here would be a big win for the bulls.