Current SPX Position: None
Next Action: Go short at 1391.02
Score (0-10): 0=Bearish=Trend Score + Turn Score=6-6
The System was stopped out for its largest loss of 22pts. Perhaps I could have taken a little smaller loss on the opening breakout, but it was a losing trade either way. SPX closed on a 50% retracement of the 1475 top. The impulse scenario I describe earlier this week has been eliminated.
However, volume has dropped every rally day, the Score remains bearish and multiple technicals (but not all) are now more overbought than they were at SPX 1475. The System will still be looking for a short trade.
Ideally, SPX would trade a few pts and a couple hours higher on Monday giving the System a better short entry. In any case, the System tells me that SPX has given itself a chance to establish a multi-week uptrend, because it has pulled far enough away from the key 1380ish level to have breathing room for a pullback large enough to relieve overbought conditions. If SPX trades back to the 1370s +/- which would currently be a 50% retracement and gets technicals oversold again, it would have the Turn Score in its favor and then a reversal back to the lower 1380s would solidify the Trend Score in its favor too for a very bullish combination. I envision a pullback to the 1380s or 1370s for a decision point, but we'll play the cards we are dealt. Good luck.
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