WEEKLY MARKET UPDATE

The long term trend remains up.  As you can see on the weekly SPY chart, the week closed higher than last week but the price action was not particularly convincing.  Once again the sentiment indicator that I look at suggests that a short term bottom may be in place.  But this is the only indicator that I look at that is pointing to an intermediate term rally.  The rest suggest a further decline or that the market remains stuck in between the upper and lower green lines.  If you recall last week I showed you an indicator that I use that helps me to identify when the market is "overstretched" to the up side and is due for an intermediate term correction. Note the previous three times these conditions occurred the market corrected at minimum to the 40 week moving average (white line) before resuming the long term trend.  In my view it is clear that there is a major battle going on between the bulls and the bears.  I still feel there's a better than 50/50 chance the market will decline further towards the 40 week moving average.  But anything can happen.  I'll keep an eye on things. Have a great weekend.