The price exhaustion signals that have been in place the last few weeks gave way to the first casualty through the Nasdaq Composite (COMP), which suffered a 1.80% drop. Curiously, the Nasdaq selloff did not inspire the same drop in prices for the S&P 500 (SPX), which is also showing price exhaustion signals on the daily and weekly charts. Moving forward, there are high expectations for the SPX to follow the Nasdaq’s lead given these signals. Another index to key on is the Russell 2000 (RUT), which actually closed higher last Friday. Unfortunately, this may not last as the RUT can record its own price exhaustion signals with TD Sell Setup @8 on Monday’s close, and TD Sell Setup @9 on Tuesday’s close. A plausible counter argument is the RUT is breaking out as money is simply rotating from tech to the small caps. This looks more apparent on the weekly chart in which the weekly TTM_Squeeze indicator is currently favoring more upside. Circling back to the Nasdaq, if the big down day last Friday is the first order, the second order is to see the Nasdaq break below the daily TDST Support level at 6121.79. The QQQ equivalent is 138.78. Achieve that, then we would be more convinced of a broader selloff.
S&P 500 (SPX) SHORT/INTERMEDIATE TERM OUTLOOK: BEARISH
Neutral if daily SPX closes above 2439.07 on the close of Monday, June 12, 2017
S&P 500 (SPX) INTERMEDIATE/LONG TERM OUTLOOK: BULLISH
Neutral if weekly SPX closes below 2381.73 on Friday, June 16, 2017
S&P 500 (SPX) LONG TERM OUTLOOK: BULLISH
Neutral if monthly SPX closes below 2363.64 on Friday, June 30, 2017