Market Could Be Setting Up a Bull Trap

Monday started slowly as the market traded sideways for most of the day and closed slightly up on lower volume than Friday. The S&P 500 gained just +2 points (+0.16%), but the Nasdaq Composite rose +22 points (+0.54%). The Dow finished the day slightly positive by +7 points (+0.05%). Volume for the S&P and Nasdaq was lower than average.

Advancers beat decliners by a slim margin of 1.2 to 1, but down volume beat up volume by 1.2 to 1. New 52 week highs beat new lows by 3.8 to 1. The VIX has fallen over the last 3 days and closed at 15.26 today. A further drop to the 12 level would put the market in more of a sell zone than a buy zone.

The Nasdaq closed above its 50 EMA for the second consecutive day, and the S&P managed to close slightly above its 50 EMA on a narrow range bar. The Dow is still below the 50 EMA. The market would be stronger if all three indices were in sync. The Nasdaq closed slightly higher today, and this could be a bull trap.