Friday, October 4, 2013


Technically the TD Buy Setup is active on the 4 hour chart but the back-to-back momentum failure signals indecision. Image

The 4 hour chart since the recent top at SPX 1729 has been silent all the way down. Until there is more conviction this timeframe gets back on track, the best outlook is best done on the sidelines.Image

What is working if the goal is to take quick profits and trail the remaining position is the 15 minute SPX chart. I only notated the 9 or 13 exhaustion points. Filter it with other oscillators or indicators, and it becomes viable tool for the short term trader.



There was no follow through yesterday’s bearish initiation. However, a close under SPX 1681.55 will keep the bearish momentum going and outlook will switch back to bearish. The extreme high reading from the McClellan Oscillator in conjunction with the SPX reaching the TD Trend Factor at 1733.84 after the Fed announcement on September 18th still indicates a blowoff top. Image

The duality of TD Sequential is tilting towards the ‘phantom’ 9 count TD Buy Setup and not the official bearish price flip yesterday. I stayed conservative by requiring all indices to produce bearish price flips before switching bearish yesterday and while they did flipped bearish, it is likely to reverse today. As such, if the SPX holds up above 1681.55, then the counter-trend move higher can happen. It’s ‘can’ in lieu of ‘probable’ due to the lack of momentum on the upside or downside. 



The divergent index patterns continue. The SPX weekly closing candlestick bar looks like a spinning top candlestick pattern which signals indecision. A higher opening next week signals a  bullish bias and vice versa. ImageImageImageImage

Parsing out the indices one by one, the Russell 2000 (RUT) is one count away from reaching a 13 count TD Sell Countdown if it closes at or above 1080.49 this week. If this happens, there will be a basic assumption the up-trend will end soon on the RUT. Absent of the qualified TD Sell Countdown, the RUT will defer to the active TD Sell Setup currently on a 4 count. Contrast the RUT with the Dow Industrials (DJI), the Dow is still in a TD Sell Setup but that will likely change starting next week so clearly that is the weak link. The Nasdaq Composite (COMPQ) remains constructively bullish. The SPX is trading under the completed TD Sell Countdown’s bar 13 back on the last week of July and never breached the risk level at 1737.48. However, the active TD Sell Setup keeps the SPX in neutral. 



Market is extended and within’ the risk level parameters of the 9 and 13 TD Sequential clusters in April and May. (last updated September 30th)


The market is pricing in a resolution and that is a bit worrisome. Given the vitriolic nature of the political party lines, and the lack of panic by the financial markets, there is decent chance a resolution can come after the October 17th deadline. It will be a soft default and the real deadline will be November 1st. It never ends. 

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