S&P 500 Index (SPX) Chart Analysis
This week:
After last week's selloff, the S&P 500 Index - SPX did not continue to decline, but also did not mount a rally that would indicate a definitive bottom has been reached.
Monday's gap open rally was followed by heavy selling on Tuesday that actually resulted in a lower close than the previous week's declines.
On Thursday, a weak open was followed by a rally that closed at its highs, and also resulted in a bullish chart pattern called an outside reversal day. These days occur when selling results in lows that are below the previous day's lows, highs above the previous day's highs and a close at those highs.
Such days are often indicators that a bottom is in. However they also typically generate substantially increased volume indicating a selling capitulation has occurred, followed by a buying stampede that creates those new highs.
We did not have the volume surge.
Another concern is sentiment. The CBOE Volatility Index - VIX, which remains at the 25 level, is telling us that extremes in fear have not yet been reached. Fear and greed run the market when it hits extremes, so fear is needed to tell us a lasting bottom is in place. This usually results in a VIX reading at least over 30, and often over 40.
We had a bullish outside reversal day, without the volume and fear readings (sentiment) that indicate a bottom has been reached in the stock market.
The result is, we feel, a short term bottom has been reached, but we still have lower lows ahead. By short term we mean days or a couple weeks at most of advances or sideways trading.
Friday's moderate advance was also not encouraging. We should have seen a strong up day after the bullish reversal on Thursday.
The declines of the past two months broke below critical support levels, and the rally we had from mid-July to early August reached to about the 50% retracement of those steep declines. Since that 50% retracement was reached, it has been mostly downhill.
|
FibTimer FREE MONTHS Offer!
Sleepless nights as your investments are consumed by a volatile Wall Street? Consider Fibtimer's trend trading services. Our trading plans are unemotional and are always invested with the trend, which ever way it is headed.
FibTimer's timing strategies MAKE MONEY in BOTH advancing & declining markets. No more sleepless nights. No more upset stomachs.
We profit year after year after year. In fact, we have been timing the markets successfully for over 25 years.
Join us and start winning!
We are currently offering 2 or 3 FREE BONUS months to new subscribers. We also have a Money back guarantee!
Special Offer - CLICK HERE NOW |
|
The market remains near the correction lows as of this Friday.
The SPX is below both its 50-day moving average and 200-day moving average and both of these averages are moving lower.
Last week we wrote; "There is the potential for a bounce next week of course. Any time you have such oversold conditions, a bounce is likely to occur. But with the amount of technical damage seen this week, we are hard pressed to imagine anything coming from it.
Note also that the selling occurred while oil prices were declining. In this case they declined all the way to $106 a barrel for crude. A better description of the selling would be plummeting. With energy prices in freefall, but no rally in the stock market, it makes one wonder what may be next."
The July 15th lows still have the look of a "potential" long term bottom, but the retest is in progress. The Nasdaq 100 Index is below its July 15th lows, and that is a negative.
As subscribers know, regardless of what we see in the tea leaves, if the market begins an uptrend according to our indicators, we will reverse to bullish positions.
For subscribers who overly worry about short term swings in the financial markets, remember that you do not have to be an aggressive timer to be a profitable timer. This strategy can and does incur small losses on occasion. Money is made in both aggressive and conservative style trading. Our Conservative S&P Timer strategy trades only the long term trends but that means it profits without the numerous buy and sell signals that active and aggressive traders take. The Conservative S&P Timer has been in cash since January 7th.
S&P 500 Index (SPX) Daily Chart
Nasdaq 100 Index (NDX) Chart Analysis
This week:
The chart of the Nasdaq 100 Index - NDX is one that concerns us and we are sure most technical analysts. The NDX has broken well below its previous lows reached on July 15th. Those lows may look like a bottom on the SPX chart, but for the NDX, it has already been bearishly broken.
Thursday's rally was a bullish outside reversal for the NDX as well as the SPX, so we may still have some short term upside left, but with the lack of a volume surge on Thursday and a VIX reading that indicates a lack of fear in the markets, we are hard pressed to see a sustained advance from these levels.
The NDX is near its lows for the current decline and closed almost unchanged for the week.
It remains below its 50-day moving average as well as its 200-day moving average, and both averages are pointing lower.
We may have seen nothing more than a bear market rally Thursday, and one that wound up adding little to the averages at week's end, after a great deal of volatility.
The March 2008 correction lows, at NDX 1673 are a likely target in coming weeks. They are about 6-7% below current levels.
The NDX portion of this strategy is BEARISH. Active traders should be in CASH (money market funds). Aggressive traders should be in the Rydex Inverse NDX 100 Fund (RYAIX) or other bearish NDX 100 index fund.
Nasdaq 100 Index (NDX) Daily Chart
|
Aggressive S&P Position - 
Aggress. SMALLCAP Position - 