The Market has been quite resilient and I am not ready so say that the run is over even though it is showing signs of slowing.  The DOW broke out of the Bull Flag on Thursday only to retrace at the close.  Friday saw a similar story as the Index rejected higher price levels.  Volume picked up on both of those days confirming that buyers are not participating in driving the price higher.  However, I’m long until I’m not.  I will need to see a definitive break to the downside before I change my outlook.  It is time to be a bit more cautious about the continuing upside until the Market decides what it wants to do.   Support resides at 9088 and 8878.  If the DOW hits those levels, I would make sure that my portfolio was delta neutral.  The critical level where I would change the directionality of my portfolio would be 8000.

The SPX is the same story as the DOW.  Higher price levels were rejected late in the week.  The Index will probably move back into the recent flag.  If the SPX breaks down through the lower side of the flag at 966 on volume then that may be a sign that we are rolling over.  If that happens, look for 956 and 944 as downside targets.  The upside target remains at 1007.

The COMPQ formed Shooting Star candlesticks on both Thursday and Friday.  That is a strong indication that upside momentum has begun to subside.  The question one must ask is the question many have been asking since early March, “Is this the beginning of a reversal?  The key to knowing whether it is merely a short term pullback or something more substantial is by watching how the Index reacts at predefined levels of support and whether there is participation in the move as reflected by volume.  I suppose that we will move back into the recent flag.  If we break through the lower side of the flag at 1938, then look for the COMPQ to retest 1905 and then 1880.  The upside targets are 2070 and 2319.

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