An IMPORTANT Market Test Today ...
You can look for one, but you won't find it ...
Look for what?
A better index that shows what the market is really doing, that can't be manipulated, or traded as an index.
Long time readers know that this index is called the Institutional Index of "core holdings". It represents where Institutional Investors have most of their money invested at any given point in time.
The core stocks in this index changes fairly often, and it does so, in accordance to what percentage of the overall Institutional funds have been invested in particular stocks.
It's a great index that can't be "influenced" like the NASDAQ 100 with its Apple stock listing. (Although there are 100 stocks in the NASDAQ 100 index, Apple's weighted contribution was equal to the influence of the aggregate of the bottom 46 stocks in the index earlier this week.)
The Institutional Index Chart: Below is our 60 minute chart of the Institutional core holdings. Note the large expanding wedge pattern that it has been going through since last November.
Consistently, the index has moved up to the wedge's resistance and then down to the wedge's support.
Well ... almost, until recently. The entire drop period since the beginning of May failed to have the index reach its bottom support. This means that the Institutional Index has NOT achieved the "closure" it needed by moving down to the expanding wedge's support line.
One of two possibilities exists now:
1. For the index to continue its down move and to take the market down with
it until it reaches the wedge's bottom support.
2. For the index to rise within the next 48 hours of trading and then move up to create a "Right Shoulder". That would mean that labels 1 and 3 would become the Head & Shoulder's neckline, with label 2 being the Head.
Where the Institutional Index ended yesterday is especially relevant. Notice that its recent rise took it exactly to its resistance line yesterday. It never got past it, so TODAY is the important test day for it to try.
BUT ... today is also the Employment Report day where the numbers will be crunched and digested by the big Wall Street firms and Institutional Investors. The judgment of the Employment Report's progress will determine if we break through the resistance today or continue to move down.