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THE STOCK MARKET UPDATE

August 5, 2014

© David H. Weis

ES: Daily

The S&P was unable to follow through on the upside after Monday’s rally. Instead,
prices fell below last Friday’s low. This down-move made only slight progress which
suggests shortening of the thrust. I would feel more comfortable with this interpretation
had the market closed in mid-range. The weak close says prices will most likely move
lower. The next potential support level is 1887.50 where the S&P met resistance in March.
Two months of absorption preceded the breakout in late May-early June. The cumulative
wave volume (12-point retrace from hourly closes) on this breakout totaled 13.8 million
contracts. Thus the current downwave can be viewed as a test of that breakout.

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