Short Term Buy Signal For S&P 500 Is Confirmed

Includes: DIA, QQQ, SPY
by: Prieur du Plessis

I am writing to you from my hotel room in New York, keeping the post short and to the point as a full day of appointments lies ahead.

Further to my post of two days ago, “U.S. equities – downtrend arrested?“, my short-term technical buy signal for the S&P 500 Index has been confirmed. The rationale is explained below.

The Shiller S&P 500 PE10 has broken the 40-day moving average on the upside.

Click on graphs below to enlarge:

The PE10 has broken both the 12- and 26-day exponential moving averages on the upside, while the 12-day moving average is about to cross the 26-day moving average on the upside.

The MACD of the PE10 is bottoming.

The VIX has broken the short-term support.

The MACD has crossed its nine-day moving average and signaled a buy for the PE10.

But it will be a rough ride. The VIX is likely to encounter support at 24.

The RSI of the VIX is entering oversold territory.

The PE10 has closed the gap with the VIX.

The RSI of the PE10 and VIX (inverse) has bounced from an oversold level.

Sources: I-Net Bridge; CBOE; Plexus Asset Management.