There was a lot of buzz yesterday that the late-day selling meant that from the morning failed breakout would necessarily come a fast move lower. However, as we have been discussing in this blog and inside 12631, the gist of the price action over the past week has been more of consolidation than anything else. Thus, with no serious follow-through to the downside by the bears today, the presumption is still one of more consolidation of the mild variety, with many charts firming up as speak. This process can take a while, which means only select stocks like Sprint are really going to “wow” you with breakouts.
Nevertheless, the lack of a rollover as many charts appear to be tightening up on daily timeframes are the focal points of the bull case going forward. Note the 30-minute SPY chart below which indicates that even though we saw a failed breakout yesterday, all we continue to do for now is merely consolidate sideways.
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