This Week In Stocks – Choppy Up, Then Down

The stock market spent the early part of the week chopping around last week, with the S&P 500 (SPX) ending just 7 points lower on the week.

On Wednesday, market activity sharply increased, with a 30-point reversal intraday. The Federal Reserve indicated it was more strongly considering reducing their balance sheet. After recovering, the market then dropped Thursday night, after the United States dropped bombs on a Syrian airbase.

Our short-term technical work shows this week the stock market may rise in a choppy manner early on and then move down towards the end of the week. The following week, however, risks increase, as the market moves into a declining phase towards the end of its short-term cycle.

In fact, the market may be gearing up for a larger move to the downside, although it’s unclear exactly when this will come. Our coming “Big Picture Analysis” on the US stock market will focus on the building intermediate-term risks.

As shown by Jill Mislinski on dshort.com, “Negative Credit Balances” in brokerage accounts (shown in red) tends to grow along as the stock market increases. Given, this reading, and the current high levels of margin debt, it’s doubtful the bulls will get the funding to fuel another move higher.

Watch the askSlim Market Week for a review on what happened in the markets this week and my short-term view for the coming week.