If at First You Don’t Succeed

The indices remain paralyzed in a holding pattern. Most traders remain convinced that a significant correction is only a matter of time. And investors have certainly given cautious clues, bidding up utilities in a clear flight to safety and yield.

And if the indices haven’t broken down the argument can be made that investors would prefer to take profits in early January, postponing an appointment with the tax man into next year. They certainly appear to be in no mood to take further chances before they can close the books on what has been a most profitable year for many.

Further, the Three Weeks Tight pattern on the S&P 500 we detailed in our last column has broken down with price undercutting last week’s low in today’s trading.

And yet we still believe the market needs to be given the benefit of the doubt. The index dailies yield setups that call for higher prices. Failure here could be devastating for the market uptrend but most leading stocks continue to hold up just fine in their price structures.

In fact our bellwether, Apple (AAPL), which had recently broken below its 50 MA on volume, bounced back with a vengeance. Whether this is a temporary reprieve remains to be seen. In the meantime we can only know what the market is telling us, which is that big money is continuing to support what has been the bull market’s most important institutional stock.