Last week Wednesday and Thursday turned the market back to resuming down trend and there is no doubt. Having said this, the short term indicators are pointing towards a small rally and the 1154/1168 area are now resistance for the potential minor rally. It would need to take the SPX back above 1180 to turn the charts positive. Currently I doubt that will happen.
SPX 40 Day Hourly
Is oversold and the 1154 & 1168 are drawn inside the chart as potential targets. The 1168 happens to be just near the 60 EMA.
NYSE New Highs - New Lows and Breadth Thrust shown below support the short term outlook that some sort of a rally towards 1154/1168 will occur. Both indicators are short term very oversold.
SPX 2 Year Daily Chart
The chart assumes that we fall until the 50% retracement and would conclude A.
NYHL - VIX CHART
This is an interesting chart a reader of OT has emailed me and I am very thankful for it. A very intersting chart indeed. This chart certainly supports the bearish view.
SPX Bull-Bear Indicator
SPX 3 Year Daily Bull Count
There is still the odd chance that we only retrace 62% of the June 2009 low to May 2011 high and we would be still in a bull cycle. The low for this count would be 1059 target.
The 1120-1123 area being 50% retracement of July 2009 low and May 2011 high has been tested few times between August and September 2011 and has held so far on closing basis.
August 8, SPX 1019.46 - August 10, SPX 1120.46 - August 19, SPX 1123.53 - August 22, SPX 1123.82 and last Friday intraday 1121 with close 1136.43. Obviously this area is key.
This chart shows that Gold and Silver are not safe anymore as they plummet below the 50 EMA. I have the odd feeling / hunch that IEF will follow suit.
US Dollar 6 Month Daily Chart
The Dollar looks overbought here and I would not be surprised to see some sort of pullback here. This would support the theory that HUI ( see Saturday Article) and SPX will rally early next week. However, the Dollar is still on a buy signal !
VIX 6 Month Daily Chart
The VIX would need to drop below 35-32.50 to turn the market back to bullish. The VIX chart does not support any intermediate bullish view.
The SPX is poised to rally early next week and most likely will stop at 1154-1168 range. We shall monitor the hourly charts to determine when to enter short. The aim on this Blog is to stay Objective and we need to acknowledge both sides of directions in order to draw profits from the tough market.