S&P 1500 Flashing Warning Signal
The S&P 1500 Composite is composed of the S&P500, S&P400 Midcaps and S&P600 Smallcaps in one index. We can use this index as a barometer of market sentiment by following the number of new highs relative to the number of new lows on a rolling basis.
Futures are (-9.00) lower this morning.
At the present time, the S&P 1500 is very close to a sell signal. If the upper panel turns red and histogram drops below zero, we will consider reducing risk further. Caution is warranted.
SPY is trading inside the May 30 gap at 268.74 pre-market, with potential for price action to fill this zone this morning. We’ll be looking for signs of buying should we reach 268.00 during the morning session.
RSI is oversold, setting up a long short term. A few things need to confirm before a potential reversal is possible.
Stocks are weak, so adding to existing long positions is not a good strategy until we see a confirmed reversal. The latter will come when we see institutions enter with conviction.
Remain vigilant and reduce risk if you haven’t already done so this week. Monday was the first warning.
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