($SPX, $SPY) There is a tremendous amount of uncertainty about the European situation and we jumping around constantly as each new headline or rumor hits. While many market participants aren't very optimistic about a solution they are also afraid of being squeezed by whatever talk emerges from the G20 meeting this weekend.
There are plenty of negatives out there and the technical picture reflects it. After the breakdown in early August, we have been bouncing around in a wide trading range for more than a month. We tested the upper resistance levels a couple of times on rumors and news that Greece was saved once again, but those moves didn't hold and the selling this week took us right to the bottom of the trading range around 1115 to 1120 of the S&P 500.
We held that level yesterday and managed a very weak oversold bounce on light volume today, but we are in a very precarious position. The testing of the support is weakening it and I don't believe the market will be able to do much to the upside until it breaches support and produces a capitulation event of some sort. Too many folks are hoping this level will hold, and the market always likes to crush any hope before it turns back up.-R.Shark