The breakout move we saw in the Indices yesterday floundered today s the retail sales number weighed on whether valuations would be sustained in the near term. In any event, volume was extremely low. In fact, it is at a recent low for all of the Indices. Other market internals are not reflecting any internal strength either. While that can change, unless or until the internals can show some strength, especially volume, expect the rotational patterns to continue.

As discussed in last night’s Briefing, I did not take long trades in the Indices yesterday due to the internals not being very strong. As you can see from today’s trading, there was simply no market internal strength to continue to propel the Indices higher. Hopefully, that will change as we move into the latter half of August.

While the strategy behind a breakout trade is fairly simple, it is one strategy that can be used along with a good tactical entry and good trade management. Today’ Briefing includes four stocks I recently made breakout trades in.

As you will also see in the Briefing, the Indices appear to be breaking out in multiple timeframes. I am a little skeptical of the breakouts and did not take any trades in them today, but will be looking at their ability to hold above the breakout Key Reference Area and for the internals to continue to strengthen in support of the move higher. Even with the rally today, they are not overbought, so the ability to move higher is certainly there. Concerning is the lack of volume. I am hoping it is related to the August vacation season, so I will approach the Market with a little more skepticism than usual.

It was very interesting to see there was really no impact on the Stock Indices after the release of the CPI numbers this morning. In fact, the Market internals were weaker than they were today, even though there as an early open attempt to take them higher. The current short and intermediate term Key Reference Areas are still valid.

Today, I also talked about and showed a recent trade I made in TSCO demonstrating how important finding breakout moves in stocks can be profitable. I trade the Indices mostly, but during times of rotation, I will seek out opportunities in various stocks using the same strategy and tactics.

Today was the fifth day in a row the Indices have been in a rotational pattern in anticipation of the CPI number to be released tomorrow at 8:30 EST. Those numbers will likely give fuel to the Market to breakout of its current rotational pattern. If there is a breakout, you should not want to see the Indices back inside the current rotational pattern, otherwise it will be a false breakout. Expect volatility in the pre-market after the CPI release and at the day session open.

As expected, the Indices paused today with the CPI release expected release on Wednesday morning. While it is difficult to trade a rotational pattern, the extremes of that rotation offer possible good areas of trade location, as described in today’s Briefing. On any Break outside of the Key Reference Areas, be sure volume and breadth are supporting the breakout. There will likely be some volatility after the release of the CPI, so be patient.

The countertrend rotation in the Stock Indices continued in today’s trading. There is no sign the internals are suggesting the rotation could become stronger. In fact, I am looking for bullish divergences tomorrow and the possibility of another good rally. However, the employment numbers are out tomorrow morning and those numbers can certainly have an impact on the determination of value by the Market. That news will certainly be a market mover.

As discussed in yesterday’s Briefing, the Indices reached a point of being overbought, but the NASDAQ was at an extreme overbought condition. This led to the possibility of some type of pause or countertrend rotation to work off the overbought condition. That is exactly what occurred in today’s trading. The question now is whether this countertrend move is complete or if it has more work to do. On any move higher, the internals should be as strong or stronger than yesterday. On the contrary, on any move lower, the internals should be weaker than today. If the internals do not confirm tomorrow’s opening move, expect a reversal from the opening move.

Today was a good day for the Bulls. While the NASDAQ is still lagging some, the Market internals certainly strengthened to possibly give it more fuel for follow-through tomorrow. The NASDAQ is at an extreme overbought condition today, so it would not be surprising to see some type of pause or rotation to work off the overbought condition. The SPY needs to hold above support that was resistance yesterday, as broke out of a rotational pattern it had been in since May of this year. Trading and closing below that level will suggest today’s rally was a false breakout. On the other hand, holding above, and retesting the breakout point can suggest a possible next powerful move higher. Tomorrow will confirm for us whether today was a euphoric move or the real thing.

The Indices opened lower today. It looked like it was going to be a good move to the downside. However, buyers stepped in and drove price back up. The problem with the rally was the internals. Market breadth in the S&P, Nasdaq, and Russell was negative. Volume was low and in the S&P, and Russell there was more down volume than up volume. This makes developing a strategy for trading the Indices difficult. However, when they do reach a Key Reference Area and the internals are strengthening in the direction of the trend, expect a good move in terms price and time. At this time, due to the weak internals, I am leaning more to a breakout move lower. However, a news event could change that and the internals could strengthen on a move higher. Right now, the risk is to the downside.

The Dip Buyers had a good day today. However, the internals were not as strong as they should have been based on the price development. Therefore, it was a weak rally. While volume was up in the NASDAQ, MSFT, META, and QCOM made large moves all on high volume. Market Breadth was negative to barely positive. It will important to see how the Indices close tomorrow going into the end of the week and end of the month. Based on the weak internals, I cannot lean toward suggesting this is the beginning of a strong rally. That could change tomorrow, but the internal structure of the Indices will tell all.