"A long habit of not thinking a thing wrong gives it a superficial appearance of being right." Thomas Paine
The SP futures fell to the bottom of the trendline associated with a rising wedge that is likely to be quite bearish if activated by a confirmed break.
A late day technical rally was able to lift prices back to support on weak volumes, a classic short squeeze. The manipulation in the US equity markets by the big trading desks and high frequency traders is centered around the SP 500 futures. Their fingerprints are all over these markets if you are watching the quotes on Level II access.
The spin from the talking heads will be that the Fed will 'do something' by way of liquidity and further easing for the markets at the upcoming FOMC meeting which is on Tuesday, 10 August.
It is likely the Fed will do nothing next week, but the traders will play their games with the small specs, especially the bears who are an easy squeeze, the markets being what they are.
For my own perspective these markets now are guilty until proven bullish, which means they must break out and stick it, and further, that there must be some substance to support the breakout, even if it is just liquidity from the Fed, aka another asset bubble. The fundamentals just do not support prices at these levels, and the volumes of buyers are not there. But it can drift higher if selling continues to be weak. That is the dangerous, Ponzi like structure of a market that sets up things like the flash crash.
SP Futures
NDX Futures
