Quick n’ dirty update today folks. Here are some of my market observations and insights. Is the bear market over, or does it have more to go?
That is the question on everyone’s mind, isn’t it?
Mid termed chart view is mixed/ bearish bias
Here are my bullet points for the weekly chart. Some are neutral, some bearish.
- The summer rally took out its last peak near 4100 (bullish) but has since then moved back below that level.
- The downtrend, which appeared to have been broken, may NOT have turned the corner. Too early to be sure.
- The “round number” of 4000 (psychologically important, plus at a point where many options contracts are written) is being toyed with today.
- The summer rally failed at the 200 day SMA, just like it did back in March
- Stochastics and RSI have rolled over.
- MACD line did a bullish crossover. But…the histogram is moving down again. Pay attention to the “0” line on the histogram – a break would be bearish.
- Moneyflow has turned from a bull trend to a sideways consolidation since the market peaked. No sign of that changing at that point. Markets need positive moneyflow to rise.
- Seasonality for markets in September and October is often poor.
Short termed timing system shows SPX is close to a neartermed rally potential
Long termed readers of this blog will recall that I use a neartermed market timing system to predict very, very, short termed moves on the SPX. Basically, I look for a run along one of the Bollinger Band extremes that coincides with an oversold stochastics and RSI hook from overbought or oversold extremes. This is applied to a daily chart. You can see the sell signal – which I noted back in mid-August on this blog (for the NAZ). Now we have the reverse setup. If the momentum indicators bottom and reverse in a day or so, we have the potential for a neartermed rally.
Conclusion: Near termed oversold, mid-termed neutral to bearish
Based on my neartermed timing system, there is likely some kind of small rally coming. Its hard to be bullish in the bigger picture…yet. This, based on the observations seen on the top weekly chart. We are retaining our high levels of cash for now. No plans to invest any of it yet. I’ll keep you in the loop. Be sure to subscribe to the blog if you do not already; that way, you will get all of my updates immediately after I publish them.
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