In the meantime, $SPX has moved back inside the upper consolidation range. The bottom of this particular consolidation is 1850. I don't know that $SPX will hit that as Friday's big sell off might just be a one-day event, but if Friday's sell off proves to be more than a one day event, then you just have to expect 1850 will be tested and perhaps fail. Since so many of these consolidation periods have led to pull backs, then, until $SPX breaks back above 1884 with gusto, you just have to on the look out for a break of 1850 in the first few days of the upcoming week.
With $SPX up less than 20pts for the year and with QQQ's, IWM , IBB , and $COMPQ in negative territory for the year, it should be obvious to everyone that there is something wrong with the markets. Are we witnessing a major distribution phase similar to those of 1999-2000 & November 2007, or are we just going to consolidate between the low 1700's and the high 1800's in preparation for the next move higher? I don't have an answer but surely the market will show its hand before too much longer, or famous last words. For now, and until we do get a clear directional signal, caution is the word of the day.
IMHO and subject to change without notice.
GL in the week ahead.
Just a quick note in the event you don't have time to get to the DXD board today (Tuesday 4/8).
The SPX 50 DMA is tagged today at 1840.34. This is higher than yesterday's 1834.63 tag point as the 50 rising because the values dropping off are below 1800. The ES overnight low traded at an SPX fair value equivalent of 1839.54 so on a fair value basis the 50 has been undercut slightly. No idea if it will hold but of course what is more important is the close.
FOMC minutes tomorrow at 2. Anybody's guess as to how the gyrations resolve out. Strap up and GL.
Also, I did post over at DXD that my $TRIN gave a sell at the close yesterday, Monday. $TRIN close above 1.xx today will confirm. Late this time.
I'm doing a road trip today and won't be back until late Wednesday. See ya then.
Are you still short IBB or have you moved on?
The NASDAQ is now trading right at the 1 year lower channel. The MACD appears to indicate this correction may be winding down (or at bottom) in spite of all the fear. If the lower channel holds, this becomes a set-up for a major move by mid-year toward 4500 range. At this point there is no reason to conclude this bull market is over. A significant breach of the 1 year lower channel would however represent a trend break so a move toward 5 year mid-channel near 3950 is probable.
NASDAQ is leading the SPX in this correction so it is quite possible that the oversold NASDAQ rebounds at the expense of the SPX. The VIX 5 EMA reached 13.3 but investor sentiment remained neutral. These mixed indicators are making this correction more difficult to call. It looks like the NASDAQ is the index to watch this time around as opposed to the SPX for others. All eyes will watch for the NASDAQ to hold the lower channel. A big IMHO.
The RSI on the $COMPQ is at 38 so this is not yet oversold and suggests several more days of selling are possible to take the RSI to 30. Maybe the RSI will reverse here. Maybe not.
The $VIX has bothered me for several weeks. Even as $SPX made new highs, $VIX hovered around 13 instead of dropping to the low 12's or into the 11's, so this one didn't go to 11.
Bearish rising wedge on daily $SPX chart says be extra crispy careful here as there might be something major afoot.