Backing and Filling

Although volume on the selloff on options expiration Friday was not as extreme as it could have been, closing near the lows issued a setback to the recent bounce, representing a sharp 50%+ retracement of the rally from early July.

Equities continue to back-and-fill with SPX closing in on 1060 support (bound at the upper end near 1115 resistance). Some positive divergences remain, including an uptrending MACD, a rather tame VIX (it did not launch to the stratosphere during Friday's selloff), a mildly-bullish put/call and the NY Stock Exchange Summation Index (still reading a buy signal).Some concerns include weakness in small caps (price relative strength has fallen to support at their EMA 34), and resurgent strength in Staples vs. Discretionaries.

We will continue to monitor price behavior with the expectation of a trading range/upward bias in the averages.

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