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For the week, SPY lost 0.8% while NDX and RUT lost 0.4%.
Even with minor losses, SPY gave up all of its gains from the prior 3 weeks. Recall, the market had gained in each of those 3 weeks, which illustrates just how shallow the advance has been.
Just 18 points separates the past 6 weeks' closes in the S&P (2118, 2108, 2116, 2123, 2126, 2107). 5 of these 6 closes are separated by less than 0.5%.
Financials, which had closed at a 7 year high a week ago, lost 1.2% this week; that's not a lot but it was enough to put the sector back to where it was trading in early December.
In short, upward momentum has been very weak, a situation we think is likely to persist until there is a more complete washout in breadth and a reset of sentiment.
Let's discuss a possible short term set up and then the longer term picture.
The more than 1% fall on Tuesday and then rise on Wednesday created a lower high. The market traded down on both Thursday and Friday. This looks like a corrective A (down), B (up) and C (down) pattern. If so, the target is the 209-210 area. The strong down momentum created on Tuesday appears to still be in the process of dissipating, a typical pattern we discussed this week here.