S&P500 - Short Term Outlook

Today was a quiet day in the stock market with the S&P forming what is known as an inside day which also happens to be one of the smallest ranges in the past 10 days. An inside day is when today's range is "inside" yesterday's range. This means today's high was lower than yesterday's high and today's low was higher than yesterday's low.

What I like about these inside days is that they usually take place just prior to a large range day. Having said that, I will look for a large move tomorrow (Thursday)in the stock market.

The question that comes to mind is which way will the move be? What I usually like to do is go with a breakout out of the inside day's range. That means a move above Wednesday's high should trigger an up move for stocks for Thursday however a break of Wednesday's low would be bearish for stocks.

Given that the intermediate trend is up and it appears that the short term downtrend line has been broken, I would prefer to be a buyer once I see SPY move above Wednesday's high. Keep in mind if the market were to gap significantly higher or lower on Thursday, that would simply negate the setup and I most likely would do nothing. Let's see what happens.