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INTERMEDIATE-TERM: OVERBOUGHT BREADTH PLUS LONG TERM RESISTEANCES, EXPECT HEADWIND AHEAD
The negative divergences I mentioned in the earlier report in chart 4.0.2 NYSE Advance-Decline Issues and 4.0.3 Primary and Secondary Indices Divergence Watch are mostly fixed, plus the previously weak sectors 3.5.0 Financials Select Sector SPDR (XLF Daily), 3.4.2 Energy Select Sector SPDR (XLE Daily) and 3.6.0 Real Estate iShares (IYR Daily) (see home builder below), were leading this week, so I could hardly find any major problems from this rally. The only thing I’m worried now is still there’re too many short-term bearish extremes, so soon or later there’ll be a pullback, the question is how big the pullback will be?
4.1.0 S&P 500 Large Cap Index (Weekly), maintain 1150ish as target. SPX touched right at the Fib 61.8%, 1145 on Friday, the next target is so called A = C at 1159 according to some Elliott Wave analysts. And if it’s broken again, then I don’t see anything in between until 1200ish.
Because there’re too many short-term bearish extremes (see table above) plus long term resistances as well as way too overbought breadth signals on chart 4.0.4 Dow Theory: Averages Must Confirm, I think there’s a good chance that 1150ish would hold for awhile.
Not much else changed, all the warnings in the trend table above are still there with not much change so I won’t bother to list them one by one here. Just pay close attention to 3.0.0 10Y T-Bill Yield, looks like a Bull Flag to me, so yield could keep rising, and if so, then indeed most likely within a month we’ll see a top of some kind.
SHORT-TERM: EXTREME PUT CALL RATIO GIVES ANOTHER TOP SIGNAL
0.0.9 Extreme Put Call Ratio Watch, I’ve mentioned this in the After Bell Quick Summary, now it looks very extended, so I believe a short-term top should be just a few days away。
Monday, as mentioned in the After Bell Quick Summary, most likely bullish. The statistics below is the courtesy of www.bespokepremium.com. From which we can see, if skip the Monday, plus many bearish extremes (see table above), plus as mentioned above 1150ish as resistance area, therefore, if there’s a Bearish Reversal Day (Open high then close in red or at least close < Open), then bear could bet its luck this time, well, of course, for aggressive traders only.
INTERESTING CHARTS:
6.4.5 GLD and UUP Watch, GLD black bar so UUP rebound on Monday?
