Same scenario...

...on Friday and today, pretty decent drop in the morning followed by an afternoon rally (actually today the rally started at 10 am). With a mere 1.75 points down little has changed at the technical level. Maybe more interesting is that this the third day in a row when the market is going down. We didn't have 3 down days in a row for more than a month. Otherwise, things remain pretty much the same on intermediate and long time frames. SPX continues to stay above both EMAs on hourly chart and 1262 proved to be a good support level both today and on Friday. SMA 120 has climbed to 1259 and will probably raise another 3 points tomorrow to 1262. If tomorrow is going to be another down day we could see SMA 120 challenged for the first time since the last leg started.

DMI remains bullish on daily and weekly charts and neutral on 4 hours chart. One month uptrend line remains intact, another reassuring sign for long term bulls.

Short term is bearish, we can easily see lower lows and lower highs but they don't really matter on longer time frames.

Tomorrow is going to be an interesting day, with market digesting the first round of earnings. Alcoa beat the estimates but is 1.8% down after hours. For the rest of the week, we have JPM earnings on Thursday and that's about it. Next week we are going to have a lot of action in the market, AAPL, GE, BAC, C, GOOG, MS and a few more "market moving" companies are going to report their earnings.

Once again let's take the market as it is, bearish on short term and bullish on longer time frames and try not to anticipate too much what is going to happen next. Better REACT to whatever market is going to do! A close bellow SMA 120 and a bearish EMAs crossing are going to be very important events, of course, but if they don't happen let's stay with the trend. The short term bearishness we saw in the last three days brought market closer to where it's suppose to be, around EMA 25-EMA50 and just slightly above SMA 120. Remember we had times when there was a 30-40 points gap between the price and SMA 120. That was way too much.

Have a nice trading day tomorrow!

babaro