The short-term bottom that formed on July 17 and the rally the following day were marked by incredible volume and by a convincing breadth reversal.  Since then, volume has trailed off quite a bit (as you would expect).  More importantly, even though the indexes have rallied up this morning off of their premarket lows, breadth has turned quiet negative, and the $TRIN, $TICK, and put/call readings are all flat-to-uninspiring.

We suppose the key question here is whether the markets will work off what appears to be some slight overbought pressure by means of time or by price.  We could either see some general choppiness from here, or a move down to retest that July 17 low.  Given that money flow has been improving quite a bit and that most ADX lines are also drifting down, we suspect some sideways trading is likely.

It’s also July.  We’ve been successfully avoiding CNBC all summer, but don’t be surprised if they using the deserted NYSE floor backdrop, featuring tumbleweed and that rattlesnake sound, and start moaning about how everybody’s left for the Hamptons.

Last 5 posts by Condor Options

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