Most breadth indicators still in overbought territory but Zweig Breadth Thrust took quite a hit today and dropped almost 6pts so is no longer in overbought territory. Meanwhile $NYMO dropped to within about a point of the lower Bollinger Band so one could argue that $NYMO is either oversold or approaching that level. If the BB’s hadn’t been squeezing together over the last few sessions, then the argument would carry more weight but that must be taken into account until proven otherwise.
60min chart of SPY showing a clear Bearish X of the 13EMA down through the 34EMA. This would normally be a ‘sell’ signal and may prove to be one if SPY doesn’t rise back above these two EMA’s tomorrow. SPY closed just below the rising trend line that I put on the chart over the weekend, but it is very close. The question is just how much room do you give SPY/$SPX before bailing. I think you have to give it until tomorrow’s close, or famous last words.
Chart courtesy of FreeStockCharts.com
Chart of $SPX using the 5/10 method. Basically $SPX remains a ‘hold’ until the 5EMA crosses down through the 10EMA. When that happens it will most likely mean more downside ahead so longs will have to make a decision then.
If the markets weren’t so overbought, I wouldn’t really read much into today’s action, but, as far as I’m concerned, markets are at a tipping point and there’s a chance that today’s action could be the start of something bigger.
Based on overbought breadth indicators, I sold my fantasy portfolio over at TheLion.com.