Bulls take the market for a spin, but lack revs

In principle, Friday's action was relatively bullish with some decent bullish candlesticks at support. Volume was a little mixed, in that there wasn't across the board accumulation, but we will take what we can.

The Russell 2000 ($IWM) closed with a 'dragonfly' doji at its 200-day MA on higher volume accumulation. It was the second such test in a couple of weeks, which increases the probability of an undercut of the moving average. There is still good support at $179 should this happen, but I wouldn't be counting on this should the break happen.  Technicals are net bearish and Friday's action did little to improve that. 

The Nasdaq came back to tag former resistance turned support with a more neutral 'spinning top' candlestick. The only technical improvement was a cross in +DI/-DI and the continued relative outperformance against the S&P.

The S&P finished with a bullish 'hammer', but the strength of the candlestick is weakened by the lack of clear price support or oversold momentum indicators. I suspect this index will hold to scrappy action over the coming weeks, but with a 4,335 swing low there is a measurable risk to work off for anyone looking at long positions.

As we enter the last week of summer I would not be looking for any major swings in the market until after Labor day. However, for August we have seen a relatively ordely decline, particularly when it looked like losses were going to accelerate a couple of weeks ago. I would be cautiously optimistic for an end of year rally (despite mid-level breadth metrics), but we will let market action be our lead. As it stands, as an investor, we are in a classic 'hold' situation.

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Investments are held in a pension fund on a buy-and-hold strategy.

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