Support Close to Failing

 | Oct 03, 2011 | 12:59 PM EDT
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I've often written that bad markets tend to wear you out rather than scare you out. The action today is a good example of that.

The indices tried to bounce and sucked in a few buyers, but they couldn't gain any momentum, so the dip buyers dumped positions and headed back to the sidelines.

Technically I continue to believe that we need to take out the 1120 area with a little vigor in order to produce a good low. We have too many traders stepping up and trying to catch a bounce every time we come close to testing the August lows, but their conviction is very low and they are producing very feeble bounces.

We'd be better off if these short-term bulls gave up and we broke support and triggered stops. The support is just too obvious and has been tested too many times already to continue to work.

If you are a bottom fisher or a contrarian, you might find some things you like. But if you are a momentum player, chart reader or position trader this market is offering very little opportunity right now. We are oversold enough for some sort of minor bounce, but so weak that you have to looking for support to fall.

It is looking more and more like 1120 is about to fall and that will be a healthy development if it does.

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