The SPX daily RSI 5 closed at 32.79 yesterday, and the retracement is now larger than two of the past 29 signals since the start of 2007. SPX has reached a level where a low wouldn’t be an extreme statistical outlier. This isn’t a false signal that is part of a larger sell signal forming however, so once I strip out the four of those, then 20 of the remaining 25 signals made it to the target level at 30 on the RSI 5. This retracement may well make it there as well.
There is something else to consider as well. SPX has broken below the daily middle band, and confirmed that break by holding below it yesterday. When this happens then there will be a test, most of the time, of either the daily lower band, or a significant moving average. My eye is drawn to the daily lower band at 1976.62, and the 50 DMA at 1972.56. Both of these are decent targets for any further move down. SPX daily chart: (more…)
I was saying on Friday morning that the bear case shouldn’t be written off yet and, well here we are. The bounce failed at the 50 hour MA and SPX made a new low, closing well below the daily middle band.
In terms of past RSI 5 / NYMO sell signals the situation is improved as the decline is now larger than two of the 29 sell signal declines back to the start of 2007, and I’d also note that SPX and Dow also made the 38.2% fib retracement levels at the low on Friday, if this turns out to be a wave 4 retracement. (more…)
At the low yesterday SPX was 1.4% off the current all time high at 2011, and we saw the bounce into possible falling wedge resistance that I was talking about as a possibility yesterday morning. That resistance was broken slightly at the close and that leaves two clear options for this falling wedge setup.
The bear option is that the falling wedge now breaks down with a target in the 1950 area. I’ll be able to given an exact target once I get a break level. This would take SPX close to key support in the 1945 area. This is the option I was looking at yesterday morning. (more…)
SPX broke down and closed under H&S support yesterday, and that H&S has a target at 1969, close to 38.2% fib retrace target at 1970, and the 50 DMA at 1971. There is obvious significant support at that target. The low yesterday was a test of the daily middle band, and that is holding so far.
I was disappointed to see the daily RSI 5 close at 35.19. The possible low range starts under 35.0, so that does mean we have at least one more weak daily close within this signal, but once we see a close under 35 then there is a one in four chance of making a low between 30 and 35, and when the RSI 5 hits 30 on a daily close then the signal has made target. SPX daily chart:
There’s not a lot to add to what I said yesterday about SPX, other than to say that we’ve seen nothing in the interim that tells us that SPX isn’t topping out here. A break over the 2011 high would impress. Failing that the next significant move should be down. SPX daily chart:
A daily RSI5 and NYMO sell signal fixed on SPX yesterday. I haven’t had enough time to run the performance on these back to the start of 2007 yet, but as there are eleven signals going back to the start of 2012, all in one of the most powerful bull runs in history, that’s a decent sample to use today.
The signals have a target at the 30 level on the daily RSI 5. Of the eleven previous signals eight went directly to target with retracements from high to low of 38, 55, 147, 55, 127, 45, 113 and 87.
The other three signals (all in 2013) reversed at or slightly below the 50 level on the RSI 5, made a marginal new high on continuing negative RSI and NYMO divergence, before turning back down for a larger retracement to a low below the first low. Two of those made it to the 30 level target, and the third made it to 34, just short. The retracements from the signal (first not higher) high to the low were 30, 25, 127. (more…)
Using monthly charts I want to update more big picture views of where we stand in the financial markets. This is just a brief summary [edit; okay it's not so brief. In fact it had to be ended abruptly or else it would have just kept on rambling] and not meant as in depth analysis with finite conclusions.
I was listening to Martin Armstrong talk about his ‘economic confidence’ model and realized that the way he views gold is similar to the way I do (and very dis-similar to the way inflationists and ‘death of the dollar’ promoters do). I don’t love the way he writes, and I usually avoid these weird interview sites, but checked it out (linked at 321Gold) anyway and found him enjoyable to listen to.
Anyway, this prompted another big picture look at gold vs. the S&P 500 and as with the shorter-term views, the picture is not pretty. (more…)