The SPX is at a make or break point, and this warrants a more in-depth look at price, market breadth and  seasonality.

But first, we’ll start as usual with a quick target recap and forecast. The SPX once again followed last week’s predicted scenario by bouncing off the lower weekly target and staging an early week rebound. The upswing met with resistance at the 2680 level and mid-week broke below the bullish target angle, triggering a sell signal. The close on Friday came exactly 1.5 points above the lower weekly target.

Current signals: Daily Sell, Weekly Sell

Weekly Buy pivot at 2626.

The projected trading range for SPX for next week is 2555 – 2715:

Looking at the bigger picture, the SPX is sitting right at important triple support. A break below is likely to target the next support levels at 2525 and 2500:

The bulls’ best hope is that technical support and seasonality, coupled with some soothing and reassuring words from Powell, can spark the long-awaited year-end rally. The 2018 Seasonal chart, which we’ve shown before and which continues to have a high correlation with the major indices, certainly argues in favor of an imminent rally:

(Chart courtesy of OT Seasonal)

Next we will take a look at market breadth. While we often reference our more exotic market breadth indicators, today’s focus will be on some of the more mainstream indicators we have adapted for TradingView.

The chart below compares NYSE and NASDAQ market breadth. They both bottomed on November 20. Unlike NASDAQ market breadth which is still above the November low (thus exhibiting a positive divergence), NYSE market breadth broke below the November 20 level suggesting that selling on NYSE has intensified.

Looking at the weekly SPY and QQQ charts along with the cumulative NYSE and NASDAQ New High/New Low indicator shows that New Highs on both exchanges peaked in September and have been in decline ever since. Here as well, the NYSE NH/NL line is below the February-April levels.

In summary, market breadth on NYSE and NASDAQ is deteriorating, with NYSE being in a weaker position. One cannot expect a material improvement in the technical outlook for the broader market without improvement in the market breadth indicators discussed above.

Charts, signals and data courtesy of OddsTrader, CIT for TradingView and NinjaTrader 8

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