Summary:
CPCE chart argues for an intermediate-term top.
Suspect that SPX 878 will be tested.
Expect a rebound at least tomorrow morning.
| Trend | Momentum | Comments - Sample for using the trend table. | |
| Long-term | Down | Idea for trading intermediate-term under primary down trend. | |
| Intermediate | Down | Neutral | |
| Short-term | Down | Neutral |
First of all, please do remember to take a look at 0.0.0 Signal Watch and Daily Highlights everyday, which now is a little bit oversold short-term, and just a little distance from the “extreme”, therefore if the market drops again tomorrow, bears better take some chips out of the table.
2.8.0 SPX:CPCE, trend line was broken AGAIN which means the market might be topped. This signal never went wrong before. But since the March rally, the signal was wrong twice. I’ve put these wrong signals on the chart so that we can see that the previous 2 times the trend line wasn’t broken in a decisive way especially the next day the CPCE went directly bellow the trend line. So accordingly, I think we need see CPCE rising more tomorrow to be fully convinced that indeed this time is different.
1.0.1 Institutional Index (Daily), take a look at SPX chart bellow first, if it could bounce sharply tomorrow, then the 2 days pullback we had, can be considered as a back test to the breakout point which is bullish. But the institutional index above already broken bellow MA200 today, so if indeed institutional index leads the market, then soon or later the SPX will breakdown bellow the MA200. Therefore accordingly, I suspect that this round of pullback may at least test the SPX 878.
Tomorrow, I expect a rebound at least in the morning. (Well, it doesn’t mean that the market won’t open with a down gap and also I’m not sure if the market can eventually close in green.) The reasons:
Short-term models from www.sentimentrader.com.
1.0.4 S&P 500 SPDRs (SPY 15 min), Bullish Falling Wedge plus lots of positive divergences.
2.0.0 Volatility Index (Daily), VIX ENV overbought, so VIX could pullback which is good for the market. If however the VIX keeps rising tomorrow, then it will bump into some strong resistances not far away above which I don’t think it’ll pass on the very first attempt. Also, 2.4.4 NYSE McClellan Oscillator is very close to an oversold level now, if the market drops again tomorrow then it will be oversold. From my experiences the NYMO oversold is quite accurate. These are 2 major reasons that I mentioned at the very beginning of this report that if the marked drops again tomorrow, bears better take some profits.
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