Today's close under the big 5000 level was pretty bearish in itself, but how we close Friday will be infinitely more important.
Transports, monthly
Transports, monthly, rainbow
Summary
So, the tranny closed at 4993, that's pretty good for the bears, but can it hold under 5k tomorrow to close the month? Its too hard to call, regardless of what the Bernanke says, what will be even more important is how the market interprets the words. Market perception - whether delusional or 'facing reality', remains the key aspect.
The rainbow chart is still sporting a red candle for the tranny, and remains one of the first real warning signs for September.
Best guess for Friday, a sell off, as far down as sp'1385/80, but that will probably be it for this cycle. We have a 3 day weekend ahead of the market, and considering the MACD cycle on the main indexes, we could easily see a 2-4 day recovery next week. The only issue then will be, can we put in a lower high <1426, or continued further melt upwards
What remains central to this autumn, are the two events of mid-September, the FOMC of Sept'13, and the German constitutional court ruling on the ESM of Sept'12. Both will largely determine whether the SP' drops to 1200, or will continue to melt higher to close the year in the 1500s.
One thing is for sure..August is almost done. ;)
Goodnight from London