Ok, as I mentioned in yesterday’s update, we are looking for a few signals to take place before we think this market has topped. One of those is a close in the Volatility Index VIX of up over 25. Although we broke 25, we have not closed above it yet. It closed at 24.83, which is getting much closer.
Another indicator was looking for a close below yesterday’s low. Not only did we push new lows, we closed below yesterday’s low. This is a good sign for shorts and bears! Another thing I am still waiting for is for a close on the CCI indicator on the S&P 500 Index weekly chart of below 100 on Friday. We’ll have to wait until then for that.
If I am going to get heavy short, prematurely, I want this to happen tomorrow:
- Close on the VIX above 25.
- Break and close below of the fibonacci fans on the daily chart (see below)
SPX Technical Analysis
The CCI is breaking down and is giving us a confirmed sell signal by crossing from above -100 to below -100. This makes me feel there is more room on the downside based on previous experience on seeing this. It could really break down big from here. Now I think this pullback is just a pullback, and not a market correction, if we don’t break out of this fibonacci fan tomorrow. If not, I think we retrace the losses and move upwards into Friday, which should cause CCI to close above 100 on the SPX again.
A break a close below 1060 means we will probably have a 10% pullback from highs. Maybe larger but time would only tell. A 10% correction would be a big move to roughly under 1,000. We shall see what happens though!Good luck and happy trading!
Disclosure: No Positions