SPX broke back over the daily middle band and the 50 hour MA yesterday, and just to underline the point, Dow broke over the 50 hour MA and managed a new all-time high. The falling channels on NDX and NYA also broke up hard. The retracement from 2011 should be over and we should see a retest of the SPX all time highs in the next few days.

So has this RSI 5 / NYMO sell signal failed now? Not yet. Of the 29 previous signals back to the start of 2009, a full nine of them reversed back up to a new high before then making a lower low. One of those signals then failed and eight made the RSI target. As there were only four other failed signals, that gives better than two to one odds here that a new high on SPX would be followed soon after by a low under the retracement low at 1978. Given that nice looking double top setups are forming here, we may be looking at a marginal higher high coming, and then a deeper retracement into the 1940s and very possibly further. (more…)