Three Developments to Ponder

We’re back – sort of. We will have a normal post tonight, but three developments warrant a “heads up” comment. First, yesterday’s move to a new recovery high from the December 2 low was not confirmed by hourly momentum and failed to break out of the larger November-December trading range.

Second, the daily Coppock Curve took on a bearish bias for a majority of 24 industry groups. This fits in with our prior observations that a majority of the groups would maintain the previous bullish bias for only a week or so, rather than the more normal 3-5 week expectation. That said, this downside reversal will need some monitoring to confirm whether it is sustainable.

S&P Hourly

Finally, the futures are sharply lower. If this translates into a sharp decline in the market though the day, it would bolster the Coppock reversal and imply a test of nearby support in the 1097-1094 area. Our primary focus remains on the 1087-1084 area (which is also trend support on the hourly P&F chart). One does not need to be a technician to realize that a decisive breach of 1087-1084 would be an important change in behavior.

Meanwhile, the post-November uptrend continues to receive the benefit of the doubt. Moreover, the backing and filling of recent weeks may be an Elliott Wave triangle or some other continuation pattern. Thus, the door is still open for a more serious test of the 1121-1156 range that we have highlighted as a significant resistance area.