The belief that the CBOE 10 year Treasury Index (TNX) hit a major low back in July 2012 still holds, even with the dramatic move Wednesday morning. From the monthly TNX, the base case remains that rates are still bottoming. The game changer in this equation will be assigned to the TDST Support level at 16.14 or 1.614%. A breach underneath the TDST level will cast doubt in the long term bottom scenario.
S&P 500 (SPX) SHORT TERM OUTLOOK: BEARISH
Neutral if SPX closes above 1877.25.
With TD Buy Countdown nearing a ’13’ on the 2 hour SPX, a full TD Buy Setup ‘9’ on the 4 hour SPX, and the long ‘hanging man’ candlestick pattern on the daily, some kind of bounce is still expected. With the sell off today, and the lack of price exhaustion from the longer duration timeframes, it is far from all-in buy for equities.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH
Change to neutral if SPX closes above 1906.13
Unless the designated level of 1906.13 breaches to the upside, it is prudent to allow TD Buy Setup, currently on bar ‘7’ guide the way forward. However with the severe morning selloff and the daily candlestick exhibiting a ‘hanging man’ pattern, a ‘perfected’ TD Buy Setup may not occur. If it does occur with another reversal candlestick pattern, we will notch it as a short term bottom.
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BEARISH
Unless SPX can close above 2010.40, staying bearish.
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Neutral if SPX closes below 1960.23 on October 31, 2014.