Is $SPX just building cause to push back above the trend line or is it just too weak and running out of steam?
We got a bottoming tail or hammer today, your choice. That is the kind of candle you see at bottoms. For this candle to prove to be predictive, then $SPX will need to close above today's high of 1755 and even better would be for $SPX to push up above 1760 and get back inside the 1 year channel.
$SPXA50R is now at 29.60, up from Monday's 25 level. Generally, when $SPXA50R drops down close to or below 25, then the market is sufficiently oversold enough to base and then move up. $BPSPX, however, continues to drop. It dropped on Tuesday despite the 13pt rally and it dropped again today meaning that, while we wait on the next move, more and more stocks have given 'sell' signals per point & figure charting which is the sign of an unhealthy market. The 5EMA on the $VIX chart I use is now just below 20 and readings in this area have occurred at previous market turning points. Will the magic work this time?
We are, however, losing two key sectors, the small caps and the Transports. We are not going to rally without these two important sectors but these also printed hammer reversal candles today so there is a chance they have bottomed. If these hammers prove to be predictive, then IWM and IYT should get back in sync tomorrow and off we go. If these two key sectors don't get back in sync, and pronto, then markets might bounce but they cannot rally.
Key areas to watch tomorrow: 1755 as local upside resistance and 1740 support on the downside. Which ever way $SPX breaks tomorrow is likely to be the direction we follow for a while, IMHO, of course.
GL
We got a bottoming tail or hammer today, your choice. That is the kind of candle you see at bottoms. For this candle to prove to be predictive, then $SPX will need to close above today's high of 1755 and even better would be for $SPX to push up above 1760 and get back inside the 1 year channel.
$SPXA50R is now at 29.60, up from Monday's 25 level. Generally, when $SPXA50R drops down close to or below 25, then the market is sufficiently oversold enough to base and then move up. $BPSPX, however, continues to drop. It dropped on Tuesday despite the 13pt rally and it dropped again today meaning that, while we wait on the next move, more and more stocks have given 'sell' signals per point & figure charting which is the sign of an unhealthy market. The 5EMA on the $VIX chart I use is now just below 20 and readings in this area have occurred at previous market turning points. Will the magic work this time?
We are, however, losing two key sectors, the small caps and the Transports. We are not going to rally without these two important sectors but these also printed hammer reversal candles today so there is a chance they have bottomed. If these hammers prove to be predictive, then IWM and IYT should get back in sync tomorrow and off we go. If these two key sectors don't get back in sync, and pronto, then markets might bounce but they cannot rally.
Key areas to watch tomorrow: 1755 as local upside resistance and 1740 support on the downside. Which ever way $SPX breaks tomorrow is likely to be the direction we follow for a while, IMHO, of course.
GL