15 Aug 2013

Although the SPX has not arrived at oversold, its partner INDU has.  This is important for those day traders who like to get in and out of their position as it hints at a volatile and very impulsive move.  The only way for this situation to negate is for the indicators to pop out of oversold and start its move back up.  Otherwise it is not advisable to trade intra-day Until we have gotten out of the oversold range.

The 60min chart is showing a divergence and could allow for markets to reverse, but we do not have a buy signal yet and we are still oversold in this timeframe again.  We should allow for markets to resolve tomorrow.  Our Monthly charts have opened up again from being bullish to bearish and will be this way until the end of the month prints its intentions.

On an EW perspective, we cannot rule out an ABC pattern from the highs and we should be cautious for an upside potential.  Yesterday we talked about the 60min 200ma being important, and that if price broke, it would mean a impulsive move and we got that today.  We should note that on the daily chart the 75ma is sitting at 1650.59.  We should watch for this as potential for a support.  The next support comes around 1620 if the 75ma does not hold.  After that its a long way down to the 200 daily ma at 1548.  But as usual, we follow what our indicators tell us and that is DOWN.

Main-Trend: DOWN
Short-Term: DOWN

I would also like to point out that the 60min chart is showing a crossover of the MA's that we have seen in reverse during the early week of July when markets made a new trend towards to the upside.  The 20ma crossing the 75 and the 200, and the 75 is now on the verge of crossing the 200 as well.  Please note tomorrow is a reactionary day...