After an almost 5% drop off the highs for the SPX, equity markets should remain wobbly until overbought excesses are gone through price or time.
S&P 500 (SPX) SHORT TERM OUTLOOK: BULLISH
Switch to neutral if 2 hour SPX if the current TD Buy Setup terminates prior to recording a “9″ and switch to bearish if 4 hour SPX closes below 1946.00.
Despite a 4.61% drop off the highs of the SPX, the 4 hour SPX chart was void of a TD Buy Setup, which can make it difficult to navigate a possible reversal. As suggested from the previous post, shorter timeframes can help adjust for volatility and in this case, the 2 hour chart has labeled TD counts. While the 4 hour SPX chart remained silent, the 2 hour recorded a cluster of 13’s and a TD Buy Setup “9”. This 2 hour SPX timeframe would have been useful as the primary timeframe for the short term when the monthly jobs number was reported. Since volatility expectations are still high, both the 2 hour and 4 hour chart will be continually used side by side.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH
Change to neutral if SPX closes above 1972.29.
On the daily SPX, a textbook bullish scenario is unfolding with the SPX completing a TD Buy Setup @9 just above the TDST Support at 1928.29. Although expectations are tempered for a significant bull run, if the SPX is able to price flip bullish today, then we’ll go with it.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: NEUTRAL
Bearish if SPX is unable to close above 1985.54.
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Neutral if SPX closes below 1960.23 on October 31, 2014.
Note that some adjustments to the counts has been made as the month of July was omitted in previous posts. The revised SPX charts show a TD Sell Countdown “13” recorded last August. This has placed both TD Sell Countdown and TD Combo Sell with their final “13” counts as shown by the blue down arrows. What is missing is confirmation by registering a bearish price flip. That can come this month with a close below 1960.23. This will provide the initial framework of prolonged selling or bull/bear indecision. The Dow and the Nasdaq can record reverse price flips with an October close below 16826.60 and 4408.18, respectively. The RUT is leading all indices lower with an active TD Buy Setup. All of the charts are as of the end of September.