Dragging out the low spot.

Looks like the pause will continue here for awhile longer. We are approaching the anniversary date of the March 2009 market lows and the resulting profit taking as investor gains become long term.

Weekly SPX with NYSE new highs and new lows.
Click to enlarge

The Correction Appears to be Ending

The US markets managed to reverse todays intraday losses and close on a positive note. While market breadth was negative with decliners outpacing advancing issues 2253 to 1584 it appears that the McClellan Oscillator has successfully completed a retest of last weeks low. Even though the last two trading days were fairly ugly from a price loss perspective, the 10% Index remained above the -500 warning threshold. While it's still possible for the markets to breakdown from here it does not appear that this will be the case as long as the 10% Index stays above the -500 level.

Todays MCO change was minimal at just +5.95. A small MCO change often proceeds a sharp move in the market within a few days. I expect a big rally Monday or Tuesday.
The McClellan Oscillator for Friday 2/5/10
Click to enlarge