No more “buy dip”? The market has consolidated for several weeks and hasn’t gone anywhere. Recently it seems “sell into strength” is back and effectively dragged down all tempts of making new high. Breaking the trading range at the upside looks very tough. US dollar jumped up last Friday and consolidated today. On the daily chart, although negative divergence we have seen for months are still there, technically speaking uptrend still holds before SPX making a swing low below 1030 (nov 2). Personally I think it’s better to watch and see how the situation develops. Because of technical and fundamental improvement of the broad market, at the moment I don’t bet on another down leg as deep as sub 800.
SPX hourly
Strengths of sectors are mixed. Tehnologies and industrials are not lagging which is not a bearish sign, but financials are quite weak. Defensive sectors seem getting stronger. My speculation is a prolonged consolidation or some pullback.
The descending triangle pattern was resolved at the down side. Unless making a swing high above 14.9, the downtrend should continue for a while.
XLF hourly
Take a look at some big names in financial sector, most of them look tired except for V and MA which were better than peers in the past.
Summary: consolidation will continue or turn itself into an intermediate-term pullback. But it’s still risky to short the broad market.
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