Resolved

Today’s rally has resolved the concerns that I have expressed in the post "Likely To Go Higher". The divergence between the DJ Industrial and the DJ Transportation has been rectified and the Dow Theory non-confirmed low remains to be valid. More importantly, the breadth indicator that did not provide the confirmation came through with a validation that the current upward move is supported by market breadth.

Here are the updated charts for DJI, DJT and SPX. The levels below the price are potential supports and levels above the price are potential resistance/target.

What Did The Market Do?

Last Wednesday, January 20, 2016, many market internals reached extreme on the negative side. The U/DVOL was more than 20 to 1 favoring the downside during the flush, the A/D line was almost completely dominated by the decliners, and the new high-new low fell below August 24,2015 level. It was like a panic flush. Go back and take a look at the 1/20/2015 morning TICK and see for yourself how many of them dipped below -1000.

Holding On

The market continues to hold above the last August low. The SP500 opened strong, then it faded as the A/D line started to reverse and went negative. Downside momentum dominated throughout the session until the last hour of trading, then the A/D started to reverse a bit and the tick started to show some buying coming into the market. The SPX printed an inside bar spinning top candle, showing indecision. For the non-short term traders, one might consider staying on the sideline until the market give more clarify on its near term intention.