Daily Middle Band Retest Fails

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The decline yesterday was a hard fail at the retest of the daily middle band on many indices, and the close yesterday, and the open today was significantly under the SPX 5 day MA. On my 5DMA three day rule stat we should now see a retest of the last low at 1911, and 95%+ a lower low there, before there is another test of yesterday’s high at 1988.63. I have found no exceptions to this rule since the start of 2007 from at least 40 instances so I’m expecting a retest of 1911 soon, very possibly today. SPX daily 5DMA chart:

150910 SPX Daily 5DMA

If we see the retest of 1911 then Stan is looking for the next short term low in the 1880-90 area, and then most likely a large bounce there before new lows. SPX 60min chart:

150910 SPX 60min Triangle

Today is a cycle trend day today and that means that there are 70% odds that one direction will dominate the day. This would often be a full trend day. Does the 5DMA stat rule out a trend up day? No, but it makes it unlikely. If we see a full trend day today it should be down. I’m looking for an AM high that fails into a sustained move down today. Nasty tape the last few days though so don’t get too married to any trade here.

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