Back on August 8th & 9th I began to warn of a potential top getting put in in possibly 10 days. At the time, $SPX closed at around 1402. Now, more than 10 days later, with $SPX back to 1402, it does appear that we are witnessing a top in formation. The mad men at the helm can take it all back tomorrow, but if they don’t then I do believe that the decline that lies ahead will not be the garden variety we’ve seen since the June low. I expect this decline to be more like the decline off the March highs into the June lows, but this is pure speculation now, though there is some historical precedent in the $SPX w/$VXO & $SPX w/$VIX charts that I put up a while back.
For the moment, I have no ‘sell’ signals in the daily charts, though it’s close using the 5/10 Method. And, with the exception of those unstoppable QQQ’s, the hourly charts of IWM, SPY, DIA all got trashed today and produced sell signals in this time frame, with DIA looking worse than the others.
60min chart of IWM showing fresh sell signal.
A quick look at breadth indicators isn’t showing any that have dropped into extreme oversold territory, which is what you would expect given that we’ve only had one day of selling. There’s always tomorrow.
If you’re not paranoid, then you’re not paying attention.