Uptrend ready to break?

The S&P (SPY) and Emerging Markets (EEM) have both gapped below long term trendline support to open action on Monday.  Action Monday and Tuesday will determine if the break is for real, but caution is warranted.  An intra-day rally Monday that would close SPY in the green would likely be very bullish short term, but a close below the trendline, and epecially continued weakness on Tuesday would indicate that it’s time to get out of Dodge for awhile.

Here is the early Monday action in SPY on a 6 month chart.  You can see the gap open below trendline:

Here is a 4 year look at SPY:

Another key risk indicator is Emerging Markets, which has also broken below trendline support on the open.

The action through Monday and Tuesday will determine how meaningful this is, but if it holds, it’s pretty meaningful.  Long Dollar (short Euro – EUO) and long Treasuries (TLT) continue to perform well.

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