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One can always read my Blog at...
https://navigatethestockmarket.blogspot.com/
I track a lot of indicators and I'm beginning to think I might know something - that's usually when everything goes to "you-know-what." The Thrift Savings Plan site is a good site for discussion of markets, because we don't have a bunch of nut cases here and there are some talented posters. On that subject...
How are you Frenchee? We haven't heard from you in a while.
My Opinion on Over Extending Gains: Recently, the CNBC news/discussion was about a delivering alpha investor survey that indicated about two thirds of investors believe the markets have gone too far, too fast. Hmmm. Going back to the top in January of 2022, the S&P 500 is up 9.4% as of Wednesday’s close. The return for buy-and-hold investors is less that 10% over the last 2+ years. It doesn’t seem too fast or two far for me. Markets have jumped up since the 25% down, Bear-market-bottom in October of 2022, but that’s what happens when Bear markets end.
The S&P 500 touched its lower trendline Tuesday and bounced higher afterward – buy the dip remains.
Still, there are some indications that are concerning: (1) The S&P 500 is 13.8% above its 200-dMA. (A number greater than 12% above the 200-day can be a concern, but it can get even further stretched after a significant bottom, i.e. bear market.) (2) Late-day action has been weak recently suggesting the Pros are getting concerned.
Bottom line: I am still more than fully invested, 65% in stocks (100% S-fund in the TSP.) I remember an investment advisor who said Federal employees can get more aggressive because the retirement plan is guaranteed money.
Hi Snippy - Glad you agree. I forgot to mention that my TSP is 100% in the "S" fund. I still think the smaller caps are in the process of "catching up."
Speaking of Bollinger Bands - they are stretched, but not yet overbought. RSI is not overbought either. The S&P 500 remains near its' lower trendline so all seems mostly good. Still there are worries since the Index is more than 13% above its 200-dMA and that's high enough to raise concerns. I am fully invested now, but keeping an eye on indicators.
Thanks Frenchee. Interesting talk by Mr. Bollinger.
I agree with your assessment, Frenchee. I was a little early since I thought the weakness was over back in late August. The S&P 500 dropped another 3% after my previous call. Today, there was a nearly 4 standard deviation improvement in new-high/new-low spread. That’s a solid bullish signal. In addition, my New-high/New-low percentages are in a zone that has previously occurred near bottoms. That’s a different indicator that looks at the percentage of new-high vs new-lows on a moving average basis. If that indicator reverses, I think we can say goodbye to this downturn. There are a few other bottom signs, too, but none screaming a bottom.
Looks like the market weakness is mostly over. I am fully invested at this point, and have been for about a week. We need some more posters here.
I think the short-term high was last week so I'd give you credit for what may turn out to be an excellent correction call. We'll see...
Thanks for keeping up the good work Frenchee. I am still holding 50%C - 50%S. I've been there since the October lows. The Wilshire 2000 is underperforming the Nasdaq Composite by 16.5% since the October low. That appears to be changing and the Russell has picked up this week. That should mean the S fund will do better too.
I summarize many indicators on Friday. My indicators were VERY bullish last Friday. I suspect they will be very bullish tomorrow, 9 June.
I remain fully invested, 50%-S, 50%-C. For me, it all depends on the 200-dMA. Many of my indicators flipped bearish last week (about 2 to 1 bears), but to some extent, they are following the price trend. If the S&P 500 can pull back above its 200-day on Monday or Tuesday, I'll stay fully invested. If not, I'll be selling. The FED guaranteed deposits at US banks; UBS bought credit Suisse and that should end contagion worries. I suspect markets will move back to buy-the-dip mode this week, but we'll see.
On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators was a little more bullish than last week (now 3-bear and 18-bull). (These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily.)
On Friday, 21 February, 2 days after the top before the Coronavirus pullback, there were 10 bear-signs and 1 bull-sign. Now there are 3 bear-signs and 18-Bull. Last week, there were 5 bear-sign and 17 bull-signs.
The Friday rundown is still giving a solidly bullish indication.
There was a Zweig Breadth Thrust 12 January. The 10-dMA, 50-dMA and 100-dMA of the percentage of issues advancing on the NYSE (Breadth) are all above 50%. That didn't happen in prior rallies in the last year.
I said some time back the the bottom was in. I still think it is.
Never wrong to take profits.
Indicators are very bullish and have been for more than a week. I'm fully invested 75% stocks overall (100% TSP), which is higher than normal for me. I generally follow the rules for a conservative retiree - 50% invested in stocks. Because there are so many pundits expecting recession and stock disaster, I went 50-50 S&C funds. If I had more guts I'd be 100% S-fund. I think we've seen the bottom, but a retest is always possible.
Happy Thanksgiving to all! (Time to go make some pies.)
Interesting...I track a modified OBV using a 10-dMA. That was designed to give quick response to OBV to better indicate tops and bottoms. I must admit I have never gone back and compared my version to signals that a regular OBV would produce. My version of OBV made a very strong move higher on 27 September. It pulled back from 31 Oct to 9 Nov. It has moved sharply higher since then and still looks bullish. Up-moves have been larger than down-moves over the last month (my Price indicator) and VIX is falling fast enough to give me a buy signal in VIX. Bottom line, right now my long-term ensemble (Price, Volume, VIX and Sentiment) is bullish, although Sentiment is currently neutral.
The 200-dMA is falling so that 4000 area could turn out to be an important test for the rally. I'd be inclined to wait and see what happens at the 200-day, assuming the rally get's that far. I think the bottom is in, but there are enough issues to be concerned. In 1998 there was a 20% correction. The dot.com crash began 18 months later. Something similar is possible this time.
I agree. I track sentiment using Rydex 2x long and short funds calculated as: {5-dma of Bulls/(Bulls+ Bears)}. Rydex traders have been bearish enough to give me a "Sentiment Buy-signal" almost every day since 3 October. I don't act on one signal, but sentiment is an important part of my long-term indicator ensemble. My "correction over" signal was 27 September based on improving internals now compared to the June lows. That signal is hard to believe, but, so far, buying the dip looks like it was the right call.
Last week indicators were slightly bullish. Friday (21 Oct) they turned full on bullish with 18-Bull and 10-Bear. I'm fully invested. This time, will the S&P 500 break thru its 200-dMA? I think yes, but time will tell. It's better to follow indicators rather than thinking too much.
Last week indicators were slightly bullish. Last Friday they turned full on bullish with 18-Bull and 10-Bear. I'm fully invested. This time, will the S&P 500 break thru its 200-dMA?
When bad news is met by a strong move higher in markets, we interpret it as a very bullish sign. We also note that today was a bullish Outside Reversal Day.
“An outside reversal is a price pattern that indicates a potential change in trend on a price chart. The two-day pattern is observed when a security’s high and low prices for the day exceed the high and low of the previous day’s trading session.”
That chart pattern is also known as a bullish engulfing pattern to the chartists. We’ve seen bearish reversals in August and September; this is the first bullish reversal signal since 1 July. That signal presaged a 13% rally in the S&P 500. Based on my bottom analysis, it appears that this time it may be signaling a more significant move higher – my “time to buy” signal was triggered on 27 September with the warning that the S&P 500 might fall below the 27 Sept close, but probably not more than 5% below it. The Index did close about 2% below the 27 September low. Today’s move suggests we may not dip below the lows again....
...Volumes have been declining since the 30 Sept low suggesting a slowdown in selling and tending to confirm that the bottom might have been in the vicinity of 3600 on the S&P 500. This has continued to support the position that the best move is to “buy-the-dip.” Today volume bounced back to about 5% above the monthly average. Further 80% of the volume was up-volume. Another strong 80%+ up-volume day Friday would be a bullish sign, lending more evidence that 12 October was the final bottom.
When bad news is met by a strong move higher in markets, we interpret it as a very bullish sign. We also note that today was a bullish Outside Reversal Day. We’ve seen bearish reversals in August and September; this is the first bullish reversal signal since 1 July. That signal presaged a 13% rally in the S&P 500. Based on my bottom analysis, it appears that this time it may be signaling a more significant move higher – my “time to buy” signal was triggered on 27 September with the warning that the S&P 500 might fall below the 27 Sept close, but probably not more than 5% below it. The Index did close about 2% below the 27 September low. Today’s move suggests we may not dip below the lows again...
...Volumes have been declining since the 30 Sept low suggesting a slowdown in selling and tending to confirm that the bottom might have been in the vicinity of 3600 on the S&P 500. This has continued to support the position that the best move is to “buy-the-dip.” Today volume bounced back to about 5% above the monthly average. Further 80% of the volume was up-volume. Another strong 80%+ up-volume day Friday would be a bullish sign, adding evidence that 12 October was the final bottom.
The 27 Sept retest of the June low looks good to me. I think the markets have bottomed, or were very close to final bottoms last week.
THE STOCK MARKET LIKELY JUST BOTTOMED (Markets Insider vis msn.com)
“The stock market has likely found its bottom this week and should stage a rally of up to 15% heading into year-end, Fundstrat's technical strategist Mark Newton told clients in a Monday note.” Story at...
https://www.msn.com/en-us/money/markets/the-stock-market-likely-just-bottomed-and-a-15-25-rally-could-take-hold-into-year-end-fundstrat-says/ar-AA12AO2s
I had a buy signal on Tuesday, 27 September. I didn't quite believe it after Thursday and Friday weakness, but this week there have been bullish reversal signals. We may have seen the bottom, although I wouldn't be upset unless markets drop more than 3% below the prior lows. It doesn't seem possible, but Pros say buy when there's blood in the streets.
The Friday (9/30/22) rundown of indicators improved, but remained bearish (19-bear and 8-bull).
BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-McClellan Oscillator is negative.
-Slope of the 40-dMA of New-highs is falling.
-There was a Follow-thru day 28 Sept and it cancels the 13 Distribution Days over the last 5 weeks.
-23 Sept was a bearish, >90%-down-volume day. 28 Sept did not meet the tests for a 90% high volume up-day.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-21 Sep was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-VIX is rising quickly.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500 so I’ll call it bearish.
- Only 23% of the 15-ETFs that I track have been up over the last 10-days.
No trading positions.
The Friday (9/30/22) rundown of indicators improved, but remained bearish (19-bear and 8-bull).
BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-McClellan Oscillator is negative.
-Slope of the 40-dMA of New-highs is falling.
-There was a Follow-thru day 28 Sept and it cancels the 13 Distribution Days over the last 5 weeks.
-23 Sept was a bearish, >90%-down-volume day. 28 Sept did not meet the tests for a 90% high volume up-day.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-21 Sep was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-VIX is rising quickly.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500 so I’ll call it bearish.
- Only 23% of the 15-ETFs that I track have been up over the last 10-days.
No trading positions. I'm currently 35% invested in stocks.
Internals have been improving on recent intra-day lows, so I sold SDS and SH in the early afternoon today. No bottom yet, but we may have a bounce.
The Friday rundown of indicators remained sharply bearish (23-bear and 4-bull). The bull-signs are from 2 types of indicators (1) Fosback signals, because new-highs are low, and (2) a couple of “oversold” indicators. Markets can remain oversold for some time so we can’t put too much value in those. The Fosback indicators have been bullish for a while, but I think we need to see zero new-highs before we see a low on the S&P 500. Here are the Bear signs:
-The smoothed advancing volume on the NYSE is falling.
-There have been 13 Distribution Days over the last 5 weeks.
-23 Sept was a bearish, >90%-down-volume day.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) has been below 50%, for 3 days in a row below 50% for my “correction-now” signal. – It hardly matters now.
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-21 Sep was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-VIX is rising quickly.
-My Money Trend indicator is falling.
-McClellan Oscillator is negative.
-The Smart Money (late-day action) is down.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500 and falling so I’ll call it bearish.
-Slope of the 40-dMA of New-highs is falling. This is one of my favorite trend indicators.
- 29% of the 15-ETFs that I track have been up over the last 10-days.
-S&P 500 is underperforming the Utilities (XLU).
I'm holding SH and SDS positions.
On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators turned sharply bearish (20-bear and 2-bull). These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily. Here are the Bear signs:
-13 Sept was a bearish, >90%-down-volume day.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-26 Aug was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-There have been 8 Distribution Days over the last 4 weeks.
-VIX is rising quickly.
-My Money Trend indicator is falling.
-McClellan Oscillator is negative.
-The Calm-before-the-Storm/Panic Indicator warned on 13 September and remains in effect for 6 days.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-The Smart Money (late-day action) is down.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500 and falling sharply so I’ll call it bearish.
-S&P 500 is sharply underperforming the Utilities (XLU).
Looks like more downside ahead.
On Fridays, I summarize a number of indicators to get a weekly feel for trend. The Friday rundown of indicators turned sharply bearish (20-bear and 2-bull). These indicators tend to be both long-term and short-term, so they are different than the 20 that I report on daily. Here are the Bear signs:
-13 Sept was a bearish, >90%-down-volume day.
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 50-dMA percentage of issues advancing on the NYSE (Breadth) is below 50.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-26 Aug was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-There have been 8 Distribution Days over the last 4 weeks.
-VIX is rising quickly.
-My Money Trend indicator is falling.
-McClellan Oscillator is negative.
-The Calm-before-the-Storm/Panic Indicator warned on 13 September and remains in effect for 6 days.
-The graph of the 100-day Count (the 100-day sum of up-days) is falling.
-The Smart Money (late-day action) is down.
-Long-term new-high/new-low data.
-Short-term new-high/new-low data.
-Cyclical Industrials (XLI-ETF) are under-performing the S&P 500 and falling sharply so I’ll call it bearish.
-S&P 500 is sharply underperforming the Utilities (XLU).
Looks like more downside ahead.
My Friday rundown of indicators improved (12-bear and 10-bull), but remains leaning bearish. Here are the bearish ones:
BEAR SIGNS
-The 10-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%.
-The 100-dMA percentage of issues advancing on the NYSE (Breadth) is below 50%
-MACD of the percentage of issues advancing on the NYSE (breadth) made a bearish crossover 30 Aug.
-MACD of S&P 500 price made a bearish crossover 22 Aug.
-26 Aug was a Bearish Outside Reversal Day.
-Smoothed Buying Pressure minus Selling Pressure is falling.
-The 5-10-20 Timer System is SELL; the 5-dEMA and 10-dEMA are both below the 20-dEMA. (The 5-day is below the 10-day so short-term momentum is bearish too.)
-Cyclical Industrials (XLI-ETF) are out-performing the S&P 500, but falling sharply so I’ll call it bearish.
-There have been 6 Distribution Days over the last 3 weeks.
-The Smart Money (late-day action) is down.
-S&P 500 is underperforming the Utilities (XLU).
-Only 39% of the 15-ETFs that I track have been up over the last 10-days.
I have short positions in SH and SDS.
Crypto currencies were down around 10% Friday. I think this is an indicator for the stock market - it looks like risk-off for now. Carter Worth, Worth Charting, was on CNBC, yesterday. He had a research note out that said “Sell Apple.” Apple is a bell-weather for the markets (it’s around 7 or 8% of the S&P 500). If Carter is correct, the markets as a whole are likely to fall along with Apple. Worth had another note out Friday that said the S&P 500 could drop to 3330 if it doesn’t break above its trend line. Here’s the piece in Forbes...
https://www.forbes.com/sites/chuckjones/2022/08/18/technical-analyst-says-sp-500-rally-could-run-out-of-steam-and-fall-almost-1000-points-to-3330/?sh=42f5b750de60
We still see breadth signals warning of a top: the 100-dMA of issues advancing on the NYSE remains below 50% and is now starting to slide down. If that trend continues, it will confirm the end of the rally.
Crypto currencies were down around 10% Friday. I think this is an indicator for the stock market - it looks like risk-off for now. Carter Worth, Worth Charting, was on CNBC, yesterday. He had a research note out that said “Sell Apple.” Apple is a bell-weather for the markets (it’s around 7 or 8% of the S&P 500). If Carter is correct, the markets as a whole are likely to fall along with Apple. Worth had another note out Friday that said the S&P 500 could drop to 3330 if it doesn’t break above its trend line. Here’s the piece in Forbes...
https://www.forbes.com/sites/chuckjones/2022/08/18/technical-analyst-says-sp-500-rally-could-run-out-of-steam-and-fall-almost-1000-points-to-3330/?sh=42f5b750de60
We still see breadth signals warning of a top: the 100-dMA of issues advancing on the NYSE remains below 50% and is now starting to slide down. If that trend continues, it will confirm the end of the rally.
I track the McClellan Oscillator of the NYSE. (It is currently 194.) I would expect it to act similarly to an Oscillator based on the 500 stocks in the S&P 500. The max low I have in recent years on the NYSE was -419 on 12 March 2020 near the Coronavirus low. The highest value since then was +361 on 9 April 2020. That makes sense. The Oscillator measures breadth and breadth jumped after the Coronavirus bottom. A high value for the Oscillator now may be telling us the bottom is in rather than a top is nearby. Still, it does look like a top is near though based on other indicators.
Both RSI and Bollinger Bands are near oversold levels so we may be near a top. My MACD analysis of Breadth turned bearish a few days ago, but this one can be early. I am not convinced that using a chart of the McClellan Oscillator is going to work for me, but I am probably missing something here.
Both Bollinger Bands and RSI are close to an overbought "sell" signal. When they signal in tandem, it is usually at a top. We do seem to be getting closer to a top of some kind and I suspect it will signal the end of the rally, especially if the day is also a high-volume, high-price move up-day. That would qualify as a blow-off top for most traders.
Thanks Frenchee! Most trend following indicators look very bullish now, but there are some important bearish divergences showing up. Utilities (XLU) & Real Estate are outperforming the S&P 500 by a lot today so, sophisticated investors agree with you. Bollinger Bands are now overbought and so is the overbought/oversold ratio (a breadth measure). RSI is not yet overbought. You will probably be right, but I think 100-dMA (4123) is very possible. 4300 might be possible, but I am less bullish now that a few more bear signs are showing up.
Thanks Frenchee. Chris Ciovacco discussed the signal at length in his latest market commentary. He noted that on Thursday of last week a Demark count pattern of 9 followed by 13 was completed. That has often signaled selling exhaustion and a reversal to the upside in the markets. It was accurate at bottoms in 2011, 2016, 2018, and in the coronavirus bottom in 2020, but that may be overly optimistic. In previous cases there were policy pivots by the Fed or European Central Banks that were made at those bottoms. This time the Fed is not going to pivot to a bullish position – they are committed to continuing rate hikes and balance sheet reductions.
Chris just says keep an open mind to any move. Markets are at critical levels.
My opinion is that with Sentiment, volume-clues, improvements in New-high/new-low data, all suggesting a counter-trend rally, it would not be a surprise to see a rally “lasting several weeks to several months.” As Chris warns, markets may also fail, so Mondays’ action is critical.
See...
Today, there were 2 important indicators that suggest a strong bounce:
(1) The 52-week, New-high/new-low ratio improved by 3.5 standard deviations. (2) There were 90% down-volume days 5 May and 9 May, however, neither met all of the tests required for a Lowry Research bearish-signal. Both closes were too high. This signal would be very bearish if closes had been lower; but today (Friday) there was a 90%-upside, volume-reversal. The close Friday did meet all the tests for a Lowry 90% up-volume day. I think we have to consider this short-term bullish. Because the 90% down-volume indicators were not as strong as they could have been, it suggests that the selling was not as strong as it could have been either. I suspect that we haven’t seen the worst of the selling, but...
...in the meantime, this bounce should be a significant one that aggressive investors may want to trade. A 50% retracement from the bottom is possible and that would indicate a 9%-10% gain to the 4280 area. Of course, a bounce may be higher or lower. 50% is decent guess for a normal retracement, but this isn’t a “normal” downturn so there are no guarantees.
As of Friday’s close, the S&P 500 is 10.1% BELOW its 200-dMA & 7.1% BELOW its 50-dMA. 7-10% looks like a reasonable rally estimate, too.
Friday was a statistically-significant, down-day. That just means that the price-volume move exceeded my statistical parameters. Statistics show that a statistically-significant, down-day is followed by an up-day about 60% of the time.
Sometimes these big down-days are at bottoms. Both RSI and Bollinger Bands were overbought and that often signals a short-term bottom. I’d like to think Friday was a bottom, but it did not meet my statistical test for a Panic Day and we also note that the S&P 500 is now only about 2% above its prior correction-low. It looks like a retest of the prior, 8 March low is more likely than a bounce now.
One item of concern. If this test is successful and the S&P 500 rebounds to a new-high, it would be a very unusual correction to have lasted so long with only a 13% maximum drop from the top. I am concerned that this could mean that the correction could go much lower to match up with previous long corrections – say 20%? This isn’t a prediction – just a worry. Only time will tell...
It’s too easy to assume that we’ll have a major crash because of all the issues facing the market. I’d rather follow the indicators. As a famous trader often said, “Trade what you see; not what you think.”
It’s hard to be anything but a Bear now. Hopefully, it won’t last much longer and we get a retest, followed by a big bounce higher this week.
My indicators are strongly suggesting that the bottom was the 14 March test of the low with S&P 500 at 4173. We'll see. If the S&P 500 goes up another 1% or so, I'll be a buyer.
The charts agreed with your assessment. The S&P 500 made a double top at 4589. Then the Russell 2000 failed to stay above its prior high. It looks like the S&P 500 will test its prior waterfall-low of 4327. The waterfall decline is usually the low, or near the low.
I saw a piece by Lance Roberts talking about the recent waterfall decline. Then Chris Ciovacco said we haven’t yet had a waterfall decline. I hope Chris is wrong.