Once you start to get market weakness and lower prices, one never knows just how much lower the market will go. The last couple of pull backs lasted two days and then the market stabilized and moved up. Potentially, this time could be different.
I mentioned last week some time that I was watching intra-day breadth and was concerned that the weakness evident there would find it’s way into the Summation Index. That’s what has happened. Today $NYSI rose by only 1.76pts and that’s very close to going negative. Sometimes you have to look the other way when $NYSI shows weakness because it is often very early but I’m not so sure that this is one of those times. The worm has not turned but if it does then it probably means that this pull back will last more than 2-3 days.
The 50MA on the daily $SPX chart is at 1415.73 and seems to be offering support for now. None of the other MA’s on this chart have had bearish crosses so there is no ‘sell’ signal on the daily chart, yet. Fibonacci retrace levels are on the right side of the chart and you can see we’ve already come down to the first level. We could easily pull back to the next level of 1402, though that is not a prediction. However, if we should drop below 1402 then the 50% retrace level in the 1390 area will become very important.
The 20,20 Sto has not had a bearish cross from above the 80 line since September 24th when $SPX was at 1456. 1456 was just 9pts from the September 14th closing high. Right now the 20,20 Sto is rolling over and it could have a bearish cross in a couple of days. The 20,20 is a slow mover and gives some very good signals so if it does have a bearish cross sometime early next week I will be out of the market and watching from the cheap seats. Just sayin’.
GL & be careful.