Squawk Evening Update: Have We Been Here Before?

Today’s range on the DJIA was a relatively narrow 88.96 points, but was cavernous compared to the daily net change of 1.51.   It was also narrower than Tuesday’s net change of 10.29 and even Monday’s already paltry 3.63.  That means that most of the market’s move this week came from Yesterday’s advance.  As traders we think that we should be trading.  To some extent we think we need to defend our warning to  be careful and to some extent we think that the market’s failure to move significantly in either direction supports our position.

Whether supported or not, the market is still refusing to give a clear signal either way and so we will continue to suggest caution.  The strong move down intra-day was enough to pull 10-minute EWO below the 140% retracement level we showed on charts.  This is a suggestion that the move down might be more than just a fourth wave, but not a guarantee.  A move below the prior wave 1high would have been further evidence, but we did not see that move materialize.

The late-day advance that took the DJIA back to near break even for the day was continued after the close on strong earnings from GOOG and now futures are testing prior highs.  Perhaps tomorrow  prices will either surge up to a new (and possible terminal) high or fall helping to confirm a top.  Of course, it could do little and prolong our wait.  We’ll have charts and more guidance in the morning.

We’ll also have more to say about bonds which are now looking more like they have put in five waves down.  Have a good evening and we’ll catch up with you tomorrow and we’ll see if October options expiration goes out with a bang or a whimper.