A report of declining exports from China came out over the weekend and caused Asian markets to trade down last evening. That continued into the western markets today with SPX opening weakly and breaking down through support at $1870 to reach $1867 late morning before bouncing. SPX strengthened all day and hit its high for the day at $1878 just before close at $1877, down $1. RUT lost $3 to close at $1201. VIX spiked up as high as 15.3%, but settled down as the market strengthened and closed unchanged at 14.2%. Trading volume fell off markedly today with 1.8 billion shares of the S&P 500 trading. Trading volume on the NYSE dropped off 15% and trading decreased 3% on NASDAQ.

The hammer candlestick on SPX is consistent with the recent dojis. Every time the bears manage to pull SPX lower over the past few trading sessions, the bulls come in and bid it back up. Today was an exception in that the $1870 support level was pierced before the bulls regained control. The hammer at the top of a rising trend could be a sign of the underlying bullish strength, but it may also be significant that the bulls could only manage to get back to the opening price by the end of the day.

I also noted a continuation of the pattern we have seen now for four trading sessions: SPX manages to close close to unchanged while RUT slowly declines. That could be a sign of traders taking their profits in the small cap stocks they consider most at risk in a decline. In any case, all that may confidently be concluded is that the bulls and bears remain relatively well balanced at this point. We remain at a tipping point. Be cautious.