It’s been a week since the last update, and in the interim, the S&P 500 has been moving sideways in a tighter range, continuing to form a symmetrical triangle pattern on the chart. I am concerned that the 200 day moving average has been tested and failed three times, and now the index is backing off that level. We also see the MACD rolling over and on balance volume stalling out.
This week has seen more troubling developments in the European bond markets, which are still dominating the news and moving the U.S. financial markets. The bond market is basically saying that the policy response has yet to address the problems sufficiently.
With the balance of risk to the downside, and deteriorating technicals, my stance on the markets is moving to defensive. I just don’t like the action we are seeing here.