All day yesterday, the S&P 500 (SPX) chart was poised to complete a ‘unperfected’ 9 count TD Buy Setup on the 4 hour chart. But at the last minute of trading, the SPX closed about a point above the 1697.61 price flip which halted the TD Buy Setup. With this morning’s flush lower, this opens the possibility of a phantom* TD Buy Setup. Phantom since the difference between an active TD Buy Setup and a non-active was one point and it occurred at the close. So the unofficial message of the 4 hour chart is the phantom TD Buy Setup is ‘perfected’ which marks price exhaustion and the market is ripe for a bounce higher. The official message is just what the count says – indecisive.
Since the SPX 4 hour chart is mixed, the daily SPX chart is locked into a fairly solid TD Buy Setup. Unless SPX gets above 1700 today, the daily momentum is to the downside. The Nasdaq100 ETF (QQQ) contrasted with the Dow Industrials (DJI) tells a bullish and bearish story while the Russell 2000 (RUT) is stalling. Overall this is bearish.
The weekly RUT will record a 12 for TD Sell Countdown this week and coupled with a shaky Dow weekly chart, another giveback looks imminent. The Nasdaq Composite (COMPQ) is the only weekly chart that cannot do wrong and has room higher if the other indices do not pull it down first.
I did try to catch a long trade at yesterday’s close but withdrew it this morning as I am uncertain of the immediate intentions of the market. While the SPX only suffered a 2% loss so far, every potential bullish rally has been rejected since the Fed meeting and resulted in 5 consecutive down days which is a first for this year. The bulls keep fighting adversity but I view 5 consecutive down days is a foreshadow to 5 consecutive down weeks which has not happened since May of 2011. (updated intraday)