Last week we drew attention to a mixed technical outlook based on the fact that the weekly trading signal had just turned bearish, while daily market breadth was oversold, which favors a sideways/up phase. We also noted that for an up phase to take hold, the SPX needs to break above 3400. The SPX started the week by rallying but stalled at 3400, and after market breadth reached overbought levels on Wednesday, the sell-off resumed.

As a result, the technical outlook is negative, since both the weekly and the daily signals turned bearish, and market breadth needs a few more days to reach oversold levels. In summary, only support at 3300 stands in the way of lower prices, and only a break above 3400 will invalidate the bearish scenario:

Every January, for the last five years, we have been publishing our upside and downside yearly targets. After 9 months, it seems like Wall Street is warming up to the idea, and now both Goldman Sachs and JP Morgan “see the SPX rallying to 3600 by year end”. In other words, they are betting on a resumption of the rally after the current sell-off ends, although it is not clear when and from what level they expect that to happen. Which begs the question: what is the purpose of giving upside targets without a corresponding downside target, and how to manage exposure, entry and exit levels, with just one price target?

With regard to Oil, our hypothesis was that there is a double bottom in the making just above $36. This proved to be the case, and oil rallied sharply. Next week’s upside target for oil is $44, downside target $38, pivot line at $40.

*Please note that the signals are provided for informational purposes only. They are in effect as of the close on Friday and may change as soon as the markets re-open.

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