In this edition of Bull or Bear, we will examine the current state of affairs in the markets. We will also examine where we’ve come from and anticipate where we might be headed in the short term. First, let’s consider the following:
The S&P500 SPDR ETF – Daily
Turn your attention to the indicator that we watch everyday, TICK cumulative. This reflects “real time” sentiment (institutions). We have seen this trend from its peak for the second consecutive day. This is important, as it shows institutions have been selling predominantly on the downtick, from a cumulative basis. If this continues today and we see constant closes below the zero line, that will add to the current downtrend in the indicator.
RSI, STO and MACD are trending lower. Volume was only slightly above average.
Fibonacci levels are overlaid, to show confluence. The shaded area aligns with 23.6% from the November pivot low to high and the 38.2% from recent pivot low to high.
It’s important to keep the current pullback in context. We are off the highs by -1.565% (240.32 – 236.56) or -3.76 points. We have pulled back for 5 days, the same duration as point “A”, the last time TICK cumulative peaked and dropped lower.
From a bullish perspective, SPY is currently trading inside the 236.60 (+/-) zone. The blocks traded in this zone, relate to the VBP histogram on the left side of the chart above. We could bounce here, given the example above (Point “A”) retracement lasting 5 trading days.
If we lose the VBP and block zone support levels, look to the shaded area (confluence zone) on the SPY chart above, as the next target.
NDX 100 Daily
Reference the same thoughts as the SPY chart, namely the TICK cumulative peak, in addition to MACD and STO. RSI is strong, considering the circumstances.Volume is below average.
If the leaders fail, that will be a sign of more to come in the days ahead.FANG stocks traded strong over the past few days.
With the issues and weakness facing crude, small cap, oil related companies could falter. Many of them have issues with debt. This is reflected in the Junk Bond Market, as members in the trading room discussed late Wednesday, Reference a daily chart here (JNK).
Breadth and price examined together suggest we might see an inflection point sooner rather than later. Reference the graphic in my book, that examines previous occurrences when NYMO extends to -80. We are more likely to see a bounce in the next 5 days.
We will discuss this more during the LIVE session today.
Happy Trading – Vinny
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