We all get so caught up in the tick-by-tick of the markets that it's easy to lose sight of the bigger picture. Here is a very simple chart:
It is, as you've guessed, a weekly chart of the S&P 500. And what does it tell us? To me, in indicates a couple of things. First, it tells me that, for the first time in nearly two months, the bulls are starting to lose their grip on this countertrend rally; and second, it tells me that unless we have a very big reversal today, this will be the first week since early March that there's been a weekly loss.
It's no accident that I'm in a lot of cash right now, because I am somewhat cautious. The large head and shoulders pattern – which is our collective best hope for a meaningful tumble to 780 – is still in place, atlhough each little push higher makes it a bit more rough and jagged. But as long as we stay beneath 860, I think we remain in good shape.
