We have positive divergence in the Sto, , & plus the Oscillator, not shown, is at -100, which is oversold. In the 60min time frame, the for the Q's is at 29 so is showing oversold. And, also in the 60min time frame, the is also showing positive divergence.
All of the above suggests the Q's will bounce and if the Q's bounce then so will the other indexes. While I do think the Q's will be contained within the confines of what may ultimately prove to be a down trending , if the Q's can break out of the channel at around 87, then I'm wrong in my assessment and the 5-year rally should resume. But until I see a convincing break out of this channel, I will remain cautious and flat this sector.
All IMHO and subject to change without notice.
GL in the week ahead.
$SPX down 7pts on the month now and while I do think that there is evidence of market weakness showing up in the monthly chart, if $SPX closes green for the month, then I'll have to start watching for a red May. As Glenn pointed out, often times when there is a change in leadership, it indicates an end of the current bull market. If you look back to 1999/2000 you will see that the Q's and $RUT clearly topped out in March of 2000 while $SPX didn't appear to be phased and hung on and was still trying to put in a new high as late as September of 2000 before the wheels finally came off.
But we are not there yet. Even though IWM, QQQ, & IBB have been hit hard over the past few weeks, I do not have a 'sell' signal in the weekly charts for these. It's close on IBB but that's not close enough. For any downside to be of significance, then we should get sell signals in the longer time frames.
We'll just have to see how it goes next week as earnings will be coming in hard and heavy.
COMP has been the market leader and probably needs to continue in that role. The SPX mid-year upper channel is 2000, so a pullback near 1800 is potentially a perfect setup for a 2 month monster rally near the upper channel. That could prove to be a perfect time to drastically reduce exposure. If I'm correct, that would be a rally for people to remember.
Technically speaking, Q's, and thus the $COMP, are set up for a bounce but I think it will turn out to be a suckers rally. The measured move on the bearish rising wedge for $SPX should take $SPX back down to around 1740 so while $SPX may bounce from 1800, and it's close now, I think the bounce will fail long before any real upside move can get established.
As soon as I can, I'll put up a monthly $SPX chart to explain what I'm seeing and why I think we're headed south for several months.
I'm waiting for TV to update their charts so I can put up a $SPX monthly chart. Until they do, take a look at the charts in the links below to get an idea of what I'm looking at now. For reference, you might want to do a screen capture of these.
1999-2000 Top: http://i1337.photobucket.com/albums/o663/StockMarketSystem/1999-2000MonthlyTop_zpsd0567f00.png
2007 Top: http://i1337.photobucket.com/albums/o663/StockMarketSystem/2007MonthlyTop_zpsc10cb271.png
History doesn't always repeat but it's always best to be aware of the fact that it could.