Volatility is certainly picking up as we are seeing more 100 and 200 point moves in the Dow than we've seen in quite some time.  Is this a sign of a change in character in the stock market, or is it just another 3% dip that is ready to be bought?  I don't have any significant evidence to suggest that things will get much worse, but you don't want to completely let your guard down - just in case. 

You can see below that the S&P 500 dipped just below the recent bullish trendline - which started at March's low - and the 50-day moving average.  Today could be a very good tell.  Will stocks rebound from this dip as it has month after month, or is it headed for a more serious decline?  We just have to watch these support areas.  If we bounce right back above the 50-day moving average it will be a good indication that this was just another short-lived dip.

These are supposed to be the dog days of summer as investors and traders take their vacations, but we have actually seen some very high volume days during the past three down days.  That could be a sign of a capitulation type sell-off as we have see a couple of times this year.  Also, notice that the PMO indicator on the bottom of the above chart, is giving a tentative sell signal as the it moves below the 10-day exponential moving average.

Bonds have rebounded well the past couple of months but they may be running up against resistance here soon.  The late May gap down sell-off could pose some short-term technical difficulties for the current rally.  You can see that resistance is pretty solid.  But any pullback here would be healthy as there is support just under 98 on the AGG chart.  That (97.8 to 98.0) would be a good time to get back into the F-fund.


                                 Chart provided courtesy of www.decisionpoint.com


Trader Fred's TSP Trader System remains on a sell signal and still has not seen a move up on the strength chart.  That is surprising considering the recent weakness.  Read Trader Fred's commentary of the system page.

The EbbChart System is in the I-fund today.  See what ebbnflow has to say on the ebbchart page after yesterday's sell-off.

I have to admit I am tempted to jump in on this weakness; something I have failed to do many times this year.  The one concern I still have is Trader Fred's continued lack of any uptick in strength on the Market Strength chart - and an obvious lack of a buy signal from his system. 

We should see the penny gain today (Wednesday) in the G-fund although there is a slight chance it will be Thursday.  A guaranteed gain sounds nice given current conditions, but if stocks do rebound in the next day or two, it will probably make that penny seem like, well - pennies.   Any more losses this morning would surely bring with it at least a dead cat bounce to play. 

That's all for today.  I'll see you back here tomorrow.

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