The expectations of a trendless market is now broken. If the reason for yesterday’s drop was the potential for Fed tapering, then that selloff should have occurred during last Friday’s non-farm payroll report. The magnitude of the losses were good enough to push the 4 hour SPX chart and the SPX daily outlook to bearish and now the weekly is about to shift neutral. If December cannot put together a strong Santa Claus rally, 2014 will set up with more uncertainty.
S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH
Using the 30 minute chart as a guide again, there was a price exhaustion signal last Friday with a recorded TD Sell Setup @9 just under the TDST Resistance at SPX 1808.36. But the SPX overshot the resistance level and quickly failed. Now there is a similar situation with the SPX trading just under the 1785.02 TDST level. While it “could” be a bear trap, the probability is against it since there is no recorded TD Buy Setup in any timeframe above the TDST Support level. Also, the SPX daily chart recorded a bearish price flip 3 days after recording a TD Sell Countdown @13. With bullish sentiment still elevated, this is a recipe for further losses.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH
It happened sooner than later but it happened. All major indices are on TD Buy Setups except for the Dow but that should change today. We’re counting on more market losses especially if the market expects a December taper. The one minor concern for the bears if there is a close inside yesterday’s range.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BULLISH
Switch to neutral with a close below SPX 1798.18. (updated December 9th)
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Will flip back to neutral with a monthly close under the January price flip level of SPX 1681.55. (updated December 1st)