Today was a tell. The market twitched, scratched its ear and shifted its feet in a manner that allowed the astute observer to tell that it wasn’t holding as strong a hand as suspected. Cards are now face up.
Two factors today tipped me off to the fact that we are in for a sideways market at best over the next several days and down at worst:
1. The Dow has now had two days in a row of weakness in the final hour. This is occuring as we come up on an enormously consequential generational trajectory (see chart below). We need a burst or acceleration to take place in order to get over this major hurdle. The last hour weakness is a sign that the institutional buying support just isn’t there…yet.
2. The SOX bounced right off the trajectory point I mentioned as its initial target on July 29th. I mentioned an initial target of 405 for the SOX. Today’s high was 403 and change before weakness took hold to knock it down to 400 on the close. The SOX should start consolidating from this point, which takes out a key driver of this recent rally in the near term.
Here are the charts of both the Dow and the SOX:
click chart to enlarge