Next Action: Stop at 1622
System Score: 3.5=Bearish=Trend Score + Turn Score=3+0.5
Proposed New Score: 42%=Bearish=Trend Score + Turn Score=12+30
The last long trade was stopped out 1598-->1602 and the trade history was updated. The System is now short. As I stated could happen for 1-2 days, the technical situation remained at nearly the same bearish level even while price dropped. That could change Monday afternoon, and bears did not make much progress today. So maybe bears need to strike Monday morning, but Tuesday and Wednesday are setting up to be fairly mixed from a technical opportunity perspective. So, that tells me once we hit Monday afternoon, the chances for a 2%+ move in either direction become less likely before technicals setup for a reversal/consolidation which could lead to indecisiveness into the July 5th nonfarm payrolls. Let's see what happens Monday.
A couple things not working in the bears favor include today's BOW day, the small TRIN change at an above average level and the VIX upperBB20 signals. All those things make a sustained downleg unlikely. On the other hand in favor of the bears, hourly MACD just crossed bearish again and the previous 5 times have been part of 35-90pt drops (the 4 instances prior to that were mixed), daily RSI14 has no posd unlike the tiny posd for RSI5 and weekly MACD crossed bearish last week. I know one can always find at least some indicators to support one's viewpoint, but I played with a ton of indicators and data points over my 8 years of trading and have grown pretty comfortable with about 10-15 of them. And, right now, they are looking fairly mixed with a bearish edge to me and that's pretty much the same story the Score is telling. So, I think a triangle-looking pattern is a real possibility here. SPX may consolidate in a 1580-1620/1630 range for the next week. I think a Monday rally to 1630ish would cause an extreme bearish Score and thus reverse fairly hard, and a Monday swoon to the 1580s would likely push the Score towards neutral for a limited rally. I favor the latter possibility but can see it going either way and ultimately trading in a triangular fashion into the jobs report at which point the spring would be wound tightly and SPX would likely need to make a decision for a big move one way or another shortly after. If my triangle theory pans out, it would constitute ABab or ABCX from the 1689 top in my opinion with at least one more large down move remaining in either case and possibly 2 with 1530-1550 obviously being my primary target. If SPX 4hr support moves up beyond 1620 and SPX can stay above that level for a couple days, I'll probably change my bigger picture analysis accordingly but I'm going with the technical flow as I see it. Good fortune.
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