Today the market sold off with moderate volume and made the first significant swing low in the short term. First of all, the long term trend is pointing up according to EMA13 and EMA34 on SPX weekly, however we don’t know if this long term buy signal is a whipsaw. After breaking out of the consolidation region at the downside, the intermediate term trend is almost reversed down. On SPX Intermediate-term Trading Signals, the down trend will be confirmed according to NYSI and MACD should the selloff last for a few more days. In the short term, the market is a little bit oversold, and negative divergences formed on SPY 15-min chart. Therefore the market may bounce back up tomorrow or even test back the breakout point at 993.
SPX daily
SPX hourly
Market breadth: on 2.8.0 SPX:CPCE, sharp rising CPCE has broken the descending trend line. If CPCE continues to rise tomorrow, this may confirm the intermediate term top. VIX went up 14.92% today and is slightly overbought now (see 2.0.0 Volatility Index Daily). From the previous pattern, it may correct a bit tomorrow which means a green day of SPX.
The crude oil gapped down and almost closed on the ascending trend line. Let’s watch and see if it bounces back up which will be bullish to the broad market. Also keep an eye on gold and see if the uptrend is still intact, and get a clue on how US dollar moves in the near future.
Gold daily
At the market close, XLF also broke out the support after a wild gap down. According to the past pattern, it may get much more oversold before making a decent bounce.
XLF hourly
In summary, the market may bounce back a little bit tomorrow however the pullback is not likely completed yet. Wait for the confirmation of intermediate term sell signal and see if the long term buy signal is a whipsaw.
