The volatility of the Shanghai market has not gone unnoticed. When the selloff set itself in motion weeks ago, China’s central bank problem solving unit lowered lending rates again to prop the market. There was a sanguine consensus among analysts that calm would be restored. It didn’t help. In fact, the selloff became a rout. Now regulators are taking desperate measures by buying securities outright, banning selling, and modifying lending rules. Using the momentum based TD Buy Setup on the weekly Market Vectors China A-Shares (PEK) as a proxy for the Shanghai market, we have a tool to gauge if market momentum has indeed halted. The current count on the weekly PEK is TD Buy Setup @5. If the weekly PEK can stay above 54.26 by this Friday, July 24, 2015, we can designate the market has stabilized and remain trendless until the next catalyst. A break below the TDST Support level at 44.25 this week will likely expose some systemic risks.
For the S&P 500 (SPX), another potential selloff is thwarted and given the weekly TTM_Squeeze is still coiling, gains may beget further gains. The weekly is still the dominant SPX timeframe.
S&P 500 (SPX) SHORT TERM OUTLOOK: NEUTRAL
Back to bearish if SPX closes below 2108.95, the daily bearish price flip on Monday, July 20, 2015.
There was a recorded 9 count TD Sell Setup last Thursday, July 16, 2015. But the completed TD Sell Setup has lateraled into TD Sell Countdown, the second portion of TD Sequential. This observation has led me to believe any price give back will be minimal, especially that the daily TD Sell Setup is likely to record a ‘9’.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: NEUTRAL
Bearish if SPX below 2108.95 on the close of Monday, July 20, 2015.
It’s far likelier the SPX will issue a new all time closing high and a recorded TD Sell Setup @9. But if TD Sell Setup is interrupted with a bearish price flip, expect more indecisive range trading.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: NEUTRAL
Change to bearish if SPX closes below 2101.49 or bullish if SPX closes above 2126.64, the previous weekly close on Friday, July 24, 2015.
If the weekly SPX continues to show strength, we’ll give it the benefit of the doubt that a new uptrend is emerging. However, a strong giveback below 2101.49 will signal will re-assume a new downtrend.
S&P 500 (SPX) LONG TERM OUTLOOK: NEUTRAL
Bullish if SPX closes above the all time monthly closing high of 2107.39 on July 31, 2015.