Back in May, with $SPX extended well above its 20MA and with negative divergence in the CCI and with the RSI at or above 70, $SPX dropped, on an intra-day basis, 120pts. A similar set up in August led to a nearly 90pt drop. Again in mid-September with the same kind of set up, $SPX dropped about 85pts.
If you catch my drift.
We entered into this same kind of situation on October 29th with the RSI at 70.55 and a non-confirmation by the CCI and I am suggesting that we're about to see the same kind of pull back ranging somewhere between 80-100pts This pull back will take perhaps two to three weeks to complete and will take $SPX into the high 1600's, at minimum. IMHO, of course.
As you can see on the chart, $SPX is still inside the trading range that it's been in for the past two weeks, or so, and while there may be some kind of bounce on Friday, today's high volume indicates distribution by large players. These large players aren't likely to re-enter the market until they're fairly certain that the dust has settled and that might not be for several weeks.
There really isn't a 'sell' signal for $SPX yet as there have been no bearish crosses of MA's. Some might think that $SPX just came down for a test of the 20MA, which it often does, and now back to the rally. And perhaps I'm wrong in looking for an additional 80pt drop from here, but I don't think so.
All IMHO, and I could be totally wrong.
GL
If you catch my drift.
We entered into this same kind of situation on October 29th with the RSI at 70.55 and a non-confirmation by the CCI and I am suggesting that we're about to see the same kind of pull back ranging somewhere between 80-100pts This pull back will take perhaps two to three weeks to complete and will take $SPX into the high 1600's, at minimum. IMHO, of course.
As you can see on the chart, $SPX is still inside the trading range that it's been in for the past two weeks, or so, and while there may be some kind of bounce on Friday, today's high volume indicates distribution by large players. These large players aren't likely to re-enter the market until they're fairly certain that the dust has settled and that might not be for several weeks.
There really isn't a 'sell' signal for $SPX yet as there have been no bearish crosses of MA's. Some might think that $SPX just came down for a test of the 20MA, which it often does, and now back to the rally. And perhaps I'm wrong in looking for an additional 80pt drop from here, but I don't think so.
All IMHO, and I could be totally wrong.
GL