The sell-off in the final fifteen minutes of trading yesterday has so far proved to be nothing more than another tease for bears grasping at straws to short this market. At the same time, I have refrained from being aggressively long largely due to the technical structure of the indices and many charts. I remain net long, but want to see more signs of a sustained, healthy uptrend. I expect the 1400-1415 area on the S&P 500 to service as major resistance initially. The true test of mettle will be how the market reacts to this zone, in the sense that quiet, mild consolidation is certainly preferred and likely much more bullish than the familiar violent indecision we have seen for a few months now. Overall, I am fully aware of the pattern of higher highs and higher lows since June 4th. Again, another reason to resist the urge to call a major top here and short liberally.

Intraday, the 5-minute SPY chart below is consolidating another bounce today. I have outlined a potential head and shoulders bearish top (purple lines below on chart). Remember, this is on an intraday timeframe. Beyond that, head and shoulders tops require confirmation with a close and hold below the “neckline” (blue line on chart). The gist of the action thus far is digesting the gains from this morning.

Bears are going to need to make more headway than this to prove that 1400 not he S&P is a major top.

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