Lets take a look at how the daily charts closed for August
IWM, daily
Dow
Sp'daily5
Transports
Summary
First, the tranny failed by a mere 7pts to close the month under the key 5k level. This has to be a disappointment for the bears who have been waiting since the spring. Oh well, we'll just have to wait another month.
Both the dow/Sp' closed higher, but the gains were well short of the morning surge, and we do close with something of a warning/bearish spiky top. Its not the most bearish daily closes, but it sure is not bullish.
As ever, the Rus'2000 small cap was the most volatile index today, and also the weakest. The daily black candle is a minor warning for next week, so thats something to keep in mind for Tuesday.
Farewell to the hole
With Jackson Hole now out of the way, I think we can start to look forward to the Sept-November trading period. It should be a lot more active, and we sure have some major events coming. There are still many expecting the fed to do QE at the next FOMC (although we've been hearing that for over a year), I still don't expect QE3 until the Dec'12 FOMC.
Still seeking a break <1354
So, I will hold short across the long weekend, near term target is sp'1385/80, thats a mere 1.5% lower. We could easily gap down to that level on Tuesday, not that I've particularly high confidence in that scenario. As noted for some weeks now, until we break the cycle low of 1354, and see a few daily closes in the 1340s, the bears can not be confident about the autumn ahead.
Right now, sp'1200 seems an impossibility to many, but a long Autumn is ahead, there is plenty of time for one major down cycle before the Bernanke hits the QE button.
A little more later