Short Term Buy Signal For S&P 500 Is Confirmed

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 |  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.

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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.

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The MACD of the PE10 is bottoming.

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The VIX has broken the short-term support.

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

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

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The RSI of the VIX is entering oversold territory.

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The PE10 has closed the gap with the VIX.

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

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