Will The Market Flip Sideways?

  • SPX Monitoring purposes;  Sold SPX on 2/12/19 at 2744.73 gain 1.36%; long 2707.89 on 2-8-19.
  • Monitoring purposes GOLD: Long GDX on 1/29/19 at 21.96.
  • Long Term Trend SPX monitor purposes;  Long SPX on 10-19-18 at 2767.78

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This week's SPX high so far is 2789.88, the previous weekly high came in December and its high was 2800.18. In most cases, the December high will be touched if not broken before a pullback or consolidation will begin. The 3 period weekly RSI sets at 89.34 and market highs usually don’t form near 90 and above suggesting this week high will be at least tested in the weeks to come. The market could flip sideways. We will wait for the next setup.

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Yesterday we said,

“The window below the volume window is the NYSE 5 period moving average of the tick. Five-period tick moving lower usually is a bearish sign for the SPY. SPY can go higher short term, but gains are normally given back”.

There is crosscurrent going on, as mentioned on page one the December high will most likely be touched before any larger pullback begins. We point out the last two instances when the RSI reached over 70; most cases when RSI hit 70 the market will make a higher high in the coming days. A couple of days ago the RSI did hit 70. What may develop in the coming days is the test of the December high then more of a sideways range where RSI falls and if the 5-day ticks drop below “0” a bearish setup could develop. The potential pullback may find support near the 200-day moving average which is near the 2725 SPX range. 

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Here is a shorter-term perspective. Over the last couple of days, the GDX rally broke above the upper channel line suggesting over-exuberance and consolidation was due. It doesn’t appear a large pullback is in the making. The bottom window is the 18 period Advance/Decline indicator which is holding above “0” which is in bullish levels. Next window up is the 18 period Up Down volume indicator which is also above “0” and in bullish levels. If both indicators where near “0” or below, then a worthwhile pullback could materialize. The top window is the RSI and readings hitting near 70 and above are actually bullish suggesting the rally will continue after a pullback. Long GDX on 1/29/19 at 21.97. 

Disclaimer: Signals are provided as general information only and are not investment recommendations. You are responsible for your own investment decisions. Past performance does not guarantee future ...

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