Last Friday’s closing candle on the S&P 500 (SPX) was good enough to erase the the 9 count TD Buy Setup on the daily SPX. So now that a bullish element has been introduced into the fold, is that all for the bearish side? Starting from the shorter time frames and expanding out, the hourly picture has recorded a 9 count TD Sell Setup so the first couple hours of trading could be weak. As illustrated by the chart above, a SPX close under 1631.38 at the end of the day will dent the impulsive bull case. Any persistent trading above 1650 will really help the bullish case. Both the Dow Jones Industrials (DJI) and the Russell 2000 (RUT) have their respective TD Buy Setups intact. This makes Monday’s trading that much more important for future direction. One market to keep an eye on is the Japanese markets. If this market unravels, there will be implications globally. Previous posts have highlighted the equity side but this one will focus on the Japanese Yen as it is a top driver of equity prices. Using the e-mini Japanese Yen futures as a proxy, the daily TD Sequential suggests the current count is following through with a 13 count TD Sell Countdown. Continued high volatility will help confirm.
Outlook is neutral but bearish overall as I’m not counting on fresh highs at this time. Monday’s trading is key for further confirmation. (updated before Monday trading)