Stock Market -- Daily Chart

As discussed in the Aug. 17 post (scroll down a little), the SPX did record a secondary or
double top and triggered a mechanical sell signal. SPX Daily Chart The market has registered
a minor pull back so far, but since this was from a short term price momentum overbought, the
action this week so far has been no surprise.

A double top in the SPX as shown in the chart is not to be taken lightly by any means if only
because there are traders who will take profits on such an indication. The broad channel uptrend
in the market has not been violated by a downside break. There has been only a trim from a
short term extended position. The logical move after a failure of the SPX to break out to a new
cyclical high would be to test the base uptrend line which now sits near 1380, especially given
the pronounced saw tooth pattern of the rally since early Jun. I have seen a little work over the
years which would suggest that the market is already flashing a bearish sign even with the
rather modest pull back in evidence just because of the double top formation, but I am not sure
how much to trust it.