Brazil does not have a whole lot going in its favor. There is a deepening recession and a political dark cloud. Using time frame continuity, the Brazil iShares ETF (EWZ) is nearing a tradeable bounce on the daily chart. To objectively see this, refer to the EWZ monthly chart first. A ‘perfected’ 9 count on TD Buy Setup was recorded last month in July which indicates some type of upward retracement is expected. However the month of August is showing TD Buy Setup going straight to TD Buy Countdown. With a week left to go in the month, if a reversal is going to show up, ideally we want to see this month or next month close at or above the TDST Support at 31.14. For the weekly chart, it has recorded two price exhaustion points, indicated by the blue arrows. They represent recorded 13’s on TD Buy Countdown and TD Combo. The trifecta would be TD Buy Setup, which can conclude this trading week or the next. Narrowing it down even more, the daily EWZ is a few days away from recording it’s own TD Buy Countdown/TD Combo Buy @13. Assuming this occurs as projected this week or next, we want to see a strong rebound to reach towards the monthly TDST Support at 31.14 by the end of September. Failure to do so enhances the continuation of the selloff.
US equity markets finally became toxic. For the S&P 500 (SPX), look for a short term bottom late Monday/early Tuesday. A more significant counter trend rally could occur right around the 1900 – 1920 level. The 1850 level is the level that could set the stage for critical support. Ultimately, I still believe the SPX is just carving out one giant trading range. Technical details below…
S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH
Neutral if SPX closes above 2036.50 at the close.
The active TD Buy Setup should have no problem recording a 9 count. How the SPX responds when it gets there is the more pressing question.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH
Switch back to neutral if SPX closes above the previous 2051.40 four hour SPX TDST Support level.
Now that the SPX has dropped more than 5.5% from the top, the 2124.35 TD Trend Factor is no longer relevant. It has proven its usefulness, but now the focus is on downside levels. Asset Managers often look at moving averages, or round numbers when buying dips. They also program in certain percentage levels centered around 3%, 5%, and 10%. Looking specifically at the 10% correct level, we have 1921.25 drawn in and couple that with a 2nd degree TD Trend Factor, we have 1903.96. A TD Buy Setup @9 would make a nice compliment for a nice rally if the SPX gets around that those levels. Let’s watch to see how the week unfolds first.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH
Neutral if SPX closes above 2103.84 on Friday, August 28, 2015.
The week ended with TD Buy Setup @2. With a convincing downside candle, the 1850.61 TDST level is the initial support for the longer term.
S&P 500 (SPX) LONG TERM OUTLOOK: NEUTRAL
Neutral until further notice.