On Friday, I mentioned how the market was setting up for a line in the sand moment. The S&P 500 was about to either break through, or bounce back from the rising trend formation (flag pattern). In addition, the 50 day moving average has declined to the breakout point of the trend.
Basically this is creating a “brick wall” for the market. If we can break above the area of resistance, we will begin to see more traders buy into this market. If we hit the wall and bounce back down, then it is an indication that traders do not feel that the economic/global conditions warrant a move higher. Instead, traders will short the market.
With today’s news that Greece is still in trouble – nothing new here – markets have turned sharply down and resumed the flag pattern. A sign that traders still are not happy: