Brief update

Breadth and Oscillators are suggesting that  the risk of a pullback is increasing

The market is:

  • Overbought

a) RSI(5) and Stochastic are overbought

 

SP 500 DAILY MOMENTUM

 

b) The weekly Stochastic of the NYSE Summation Index is at an extreme:

 

NYSI WEEKLY

 

  • Dangerous

The ratio VIX:VXV is standing in the dangerous zone where a reversal is likely

 

VIX vs VXV

 

  • Negative divergences

a) The McClellan Oscillator is in a down trend

 

NYMO

 

b) The 10 dma of the NYSE Advance-Decline Volume is also in a downtrend

 

10 D NYUD

 

  • Option activity (Contrarian indicator) is now entering the “excessive” optimism zone

 

CPCE

 

SP 500 ended the day with a Spinning Top (This candlestick in a prolonged uptrend is suggesting a potential buying exhaustion)

Above today´s hod we have the gap at 2096.92 that preceded the late August waterfall

Not holding above the breached trend line from the October 2011 low will give the frst indication that a pullback is in progress

If this is the case the key levels are:

  • Support 1 : Range 2061 (200 dma) – 2052.51 (Last Friday´s gap)
  • Support 2: 2027 ( 20 dma) – 2021 (September breakout)

If the previous resistance now support at 2021 does not hold the risk of new lows would substantially increase

 

SP 500 DAILY CHART

 

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