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From last night's update: Support for the spx sits at 1053 and then 1049. Resistance pivots are at 1069 and then 1071.
Review of previous night's notes and today's tape: The spx made it up to our R2 from last night’s update, but failed to complete the 1053 downside target. But overall, the support/resistance levels stayed in tact today. At the close today, the indexes have left everybody hanging again.
The spx may have completed wave 2 at the highs and is about to take on a wave 3 down of (1) of the P3. Or today’s highs completed wave 1 of a wave (5) up and we are currently making wave 2 down. The decline from the highs was strong and it would have made things easier to take an educated guess as to which wave count was going to win the battle, if the wave 2 up or the rally on Monday wasn’t so strong.
The plus for the bears, is that the reversal from the highs came on higher volume than the rally on Monday. The rally from the lows never took out the 78% retracement level, which still keeps the wave 2 up in tact. The bullish case comes from the bear’s failure to follow through with a sharp decline during this morning’s reversal. I would have expected a stronger push lower if we are starting a wave 3 down.
But the bear’s case is still in tact as is the bull’s case. So we have to stay short term neutral until the markets give us more information. But one thing I will not, the bulls have more at risk then the bears here. If we are starting a wave 5 up, odds of it ending between the 1075-1090 level are pretty high, which is only slightly higher than the highs left behind last week. If the bears win this battle and we are about to start a wave 3 down of (1) of P3, there will be “greed blood” in the streets for many months to come.
Bottom line: We have to stay short term market neutral until the indexes give us more information.
Mel’s Corner: This is going to be a new addition to our site for any members looking for the next day’s trend through a unique system designed by Mel.
Numbers range from -20 thru 20. -3 thru 3 are "null" signals.
Negative numbers are bearish, positive numbers are bullish for the next trading day.
Mel’s trend finder indicator gave a +2 reading tonight, which is null reading for the markets on Wednesday.
Sentiment Indicator: (contrarian indicators) The short term sentiment indicator (1-3 days) is in neutral territory. Intermediate term sentiment indicator (5-10 days) remains in neutral territory, even with today’s big move higher. The longer term sentiment indicator (3-6 weeks) is in neutral bullish territory.
Bottom line: With all of the indicators in neutral territory, we have to stay short term market neutral.
"Smart Money" Trend The smart money was non existent today.
For Tomorrow: Support for the spx sits at 1057-1053 and then 1043. Resistance pivots are at 1064-1070 and then 1078.
Gary
Today we closed out of: Proshares Ultrashort S&P500 (SDS) -0.75% Proshares Ultrashort QQQ (QID) +0.96% Proshares Ultrashort QQQ (QID) +0.00% Proshares Ultrashort S&P500 (SDS) -0.30%
For more of Gary Dean, sign up for a Free 15-Day Trial to his MarketsPath.com Trade Journal and receive intraday trade alerts on ProShares Ultra Index ETFs.
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