(9:35pm ET: I’ve added a second $SPX chart at the bottom of this post.)
My suspicions confirmed. At least so far. What we witnessed over the previous few days was nothing more than covert distribution and today we finally saw overt distribution. I don’t think this is the end of the distribution.
The markets once again went into extreme oversold mode with $NYUPV dropping to 27.20 and 97% of today’s volume going into declining issues. In the past couple of months we’ve seen back-to-back extreme oversold days so don’t be surprised if we get another one tomorrow. Well, that is unless those Euro fellows come out with a major positive plan.
$SPX gave a sell signal in the 60min time frame today when the 13EMA crossed down through the 34EMA. Interesting that back on Tuesday the Sto had a bearish X. That Sto is now oversold but it may stay that way until the RSI dips down to the 30 area.
Chart courtesy of FreeStockCharts.com
Because I don’t think we’re anywhere near being out of the woods, I doubt either the 20MA or the 50MA will offer any kind of support in the next few sessions. For all I know we could be headed back to $SPX 666, but just don’t know it yet. Unfortunately, Wilder’s ADX, which started to break down yesterday, is now turning bearish so I think any hope of an ADX bullish X of the -DI line is out the window.
I’ve put the symmetrical triangle back on the chart because the $SPX really never really did do much after clearing the upper trend line and now has fallen back inside the pattern. Bulkowski says that the first break out of this pattern is often a false break out and that looks to be the case here. If this really is the case, then we may be headed back for a test of the rising trend line, now around 1180.
I sold all my TNA today.
Here is a chart that does not look good for the $SPX, at least as of this moment. This large falling price channel would be negated the moment that $SPX closes above the 1277 level. Until then, the $SPX is at risk of running all the way down to the 1158 level.
The high to the left of the chart is the July high. The lines are not exactly parallel, as they should be in a channel, but that may not be important at the moment. What’s important is that $SPX has been contained within this falling channel since late October and nothing says it can’t drop down to the lower trend line. Not a prediction. Just sayin’.