After four consecutive down days, the market recovered quite well today. The NYSE up/down volume ratio was 8.97 and almost qualified for a major accumulation day, the volatility decreased dramatically (see 2.0.0 VIX daily). On SPX intermediate-term chart, all intermediate-term signals are pointing down, and the giant bearish rising wedge seems broken. On SPX:CPCE chart, broken trend line confirms the intermediate-term down trend (however we have to keep in mind that this signal doesn’t tell how long the downturn will last), at the very least the pullback will last for a while.
Although the total trading volume wasn’t strong enough to judge whether today marks a short-term reversal, personally I feel that the market is likely bullish over the short-term which can been seen on CPCE and very bullish CPC at 0.80 (refer to 2.8.1 CPC). If the market gaps up tomorrow and reaches 1050+ with increasing volume, the short-term trend should be considered as reversed to up.
Financials seem bullish today. The nearest resistance is at about 14.8. Should it break it with strong volume – which seems not a problem – the down trend will be reversed.
SPX hourly
XLF hourly
Finally, keep an eye on US dollar. For several months, it couldn’t break up EMA34 and so far the downtrend has not been stopped. It is hard to say if it’s good to see a new swing low, but I suspect the market will at least look bullish if this becomes true.
US dollar daily
Summary: long term is still bullish – technically; intermediate term is downtrend, but it may get reversed quickly; short term is bullish.
