The market pulled back more today. The volume increased a little bit, but the volatility spiked up (see VIX daily). This is the second consecutive down day, the short term trend is obviously down but it is interesting to see how resilient the intermediate term uptrend is. On the bright side,
- the market is close to overbought in the short term, and there is a few positive divergence on the intraday charts (see SPY 30min and SPY 15min).
- Although the technical indicators on the daily chart start to point down, there is no lower low at the moment on major indices.
- The unusually high TRIN often causes strong bounce back up on the next day.
- CPCE and CPC still look neutral to bullish, at least there is no significant concern.
- The rally on US dollar will meet resistance on MA very soon and we have to see if the big downtrend is really reversed or not.
- The pullback on crude oil is approaching to a support level, we are not sure if this level will break.
However, we should be very cautious to the giant rising wedge, negative divergence, and sell signals on intermediate term trend (see SPX Intermediate-term Trading Signals). A lower low is made on SPX daily chart will be an evidence that the uptrend is materially changed and the basic strategy should be changed. At the moment, I doubt if it will happen.
Summary: both intermediate term (in term of technical indicators) and short term trends are confirmed to be down; however in the short term the market may bounce back up.
SPX hourly (my wild guess is to kiss back 1075-1080 at least)
XLF hourly (unless the resistance is taken, the rally is gone)
XLF daily (more pullback? but it’s still higher high and higher low)
US Dollar daily (see if the magic MA resistance will work again)
Crude oil daily (test the support?)
