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Greetings from Europe/ Good Old Germany
SPX Hourly made a huge move on Monday and hourly is approaching overbought. SPX 1241 is the 62% retracement and key area for this rally
Dow Theory is showing a buy signal whereby NYSE Summation has still a sell signal.
More charts and comments later
Happy Thanksgiving Day to all our US readers & traders and many thanks for supporting OT
As a brief reminder, I am off to Europe tomorrow for probably 2 weeks but will make some market comments throughout my stay.
Well, nothing much has changed to yesterday and bearish picture prevails. The hourly hardly moved and in the afternoon the market sold off again and this has been a pattern of late. Rally into noon/lunch time and sell off thereafter.
The short term trend and intermediate trend remains on a sell signal. The short term trend would need to break ES 1197 to stand a chance of changing. So far we continued marking lower highs and lower lows and that means the trend remains overall down.
Again, the overall picture remains bearish since last Thursday sell signal in NYSI with break SPX 1230/1226. . The SPX might aim for 1229 to test the break down area, but it does not change the current negative picture.
SPX 30 Minute Chart is showing some sort of life and looking reasonably okay
SPX Hourly remains oversold and the prior marked "?" has been answered already. We do have a tiny crossover in MACD and this is the only positive short term
NDX SUMMATION AND PERCENTAGE OF STOCKS ABOVE 50/200 DMA
Charts remain on SELL
NYSE SUMMATION - > SELL
NYSE ADVANCE-DECLINE and NYSE UP-DOWN VOLUME remain on SELL
NYSE Percentage of Stocks above 50/200 DMA remains on SELL
NYSE New Highs - New Lows
This is the only chart showing some sort of positive divergence as the 34 Average is still in positive territory but can change. Not such a big number of new lows has been recorded so far. Having said this, the indicator is not in the positive zone and shows a slightly negative number
Summary:
Nothing much has changed since Sell Signal of last Thursday. Short term still awaiting the bounce.
As explained end of last week and over the weekend, the break of 1226 was bearish and market remains bearish for the time being. Certainly a bounce in hourly is very much due and standard retracement targets should be possible to reach. Key short term areas are SPX 1229 and SPX 1240 and will be a huge hurdle to overcome.
The Chin Wag Team at OT is not biased and trades the direction of the market and the consequent signals. Currently the signals are bearish and cash is king. Until this changes, the readers should remain cautious and in cash or if they desire enter shorts at retracement levels with stops above 1260.
SPX 3 Month Hourly
Chart is suggesting that we aim for 1229 as a minimum and 1240 is the maximum
SPX DAILY
Once MACD turns below zero the selling would increase and after the bounce we might approach 1177-1150 area next. The only way to avoid this scenario is the break of 1245-1260 . Again, 1260 is the key for the bulls to turn the negative picture around. Stochastic in daily chart is slightly oversold but can stay oversold as MACD is pointing down. MACD would need to turn back up.
SPX Percentage of Stock abve 50/200DMA
This chart is showing the rapid decline of stocks above 50 DMA and stocks above 200 DMA never really rallied up and being a negative divergence during the rally 1074-1292. It was pointed out during the rally that the 200DMA percentage would need to rise.
NYSE SUMMATION INDEX remains on a SELL SIGNAL
Needless to say that NYSE Advance-Decline and NYSE Up-Down Volume have turned bearish as well.
BREADTH THRUST
Chart shows we are back to bear market rules. It also shows that we are short term extremely oversold and a stronger bounce is imminent and should last until End of Week. This was discussed in my article earlier this weekend.
Dow Theory
All 3 are now trading below 50 EMA and this is a sell signal as well even so we will bounce back to 50 EMA or slightly above. We shall monitor the chart end of week again
RSP=CPCE
Chart is showing the red arrow and end of October I pointed out with the red arrow that we are overbought. ( 1254-1276 target dicussed). The BPSPX and BPNDX have broken 50 EMA as well. Missing is NYSI but we do have a sell signal already in NYSI
S&P500 Bull-Bear Indicator
Since the break of 1315 in SPX this chart was shown several times and I tried to remind readers that bear market rules apply despite the strong rally in October. In a bear cycle, bears are getting spanked hard with very strong rallies and bulls can be trapped as well if they do not understand the overall rule. When bear cycle or bear market rules apply, trade cautious the strong rallies and scale out at sell signals after the rally occurred. Stay cash ( my favorite) or short if desired and enter long at extreme oversold readings measured by breadth and not charts as charts can stay longer oversold. If we look closer, in 2008 the market tried a comeback too when 13 EMA tried to reach 34 EMA and MACD moved towards the zero line before declining again.
SUMMARY:
We enjoyed a handsome rally early October and we were part of it at the very beginning. Since last Thursday sell signal in NYSI the overall signal is bearish and remains bearish below SPX 1245-1260. Unless Summation Index turns back up, the prudent approach is to remain in CASH or enter a tiny bit of shorts during the next bounce this week and guarantee stop just over 1260.
Well, the market decided to go straight to 50% retracement and we hit the 1.5 x A/B target as C. The ES would need to break 1292 to brighten up the picture. After break ES 1292 the next tough resistance is 1203/1204 and major resistance is 1226 /1229 area in ES.
Again, the market remains in down trend below SPX 1245-1260 and this has to be understood. I mentioned it end of last week that NYSI has a sell signal and repeated it over the weekend.
Meanwhile, the hourly chart is extremely oversold and Trin is too high. I would not be surprised if market bounces to the retracement levels indicated in the chart.
Note:
I will post later some breadth charts with explanation
