Bear market retracement appears in the works

And then, while Intermediate Cycle Momentum remains moderately "Oversold," short-term Momentum has recovered from deeply "Oversold" levels created in early August to record moderately "Overbought" conditions. There is also the fact that Major Cycle Momentum remains moderately "Overbought" and would almost certainly slip into negative territory if renewed selling develops. Such negativity on that larger cycle would reverse the trend that has remained positive for over two years.

Daily S&P 500 Emini Futures contract with Cumulative Volume

Weekly S&P 500 Emini with Cumulative Volume

And last, the short-term trend remains positive currently despite weakness at the end of last week. While it’s possible strength to 1230.71 in the S&P on August 31 fulfilled the upside requirements of the "C" leg of an A-B-C rally, we would need to see prices decline below 1156 to 1178 (see Daily Stop Loss Tables) as this week progresses and Price Channel Stop levels rise. If such action does not develop, its possible current weakness could prove to be merely the "B" leg of a larger A-B-C retracement which would then measure out toward 1255 in the S&P and "Neckline" resistance of the Head and Shoulders Top formation broken on the downside the first week of August. Such return action can be classic once a H&S Top has been formed and resolved on the downside.

Index

Daily Stops

Weekly Monthly
9/5 9/6 9/7 9/8 9/9 9/9 9/30

S&P 500
Index

Holiday

SELL
1158.07

SELL
1166.81

SELL
1176.09

SELL
1178.00

BUY
1331.15

BUY
1288.25

Dow Jones
Industrials

Holiday

SELL
11105.01

SELL
11191.12

SELL
11266.27

SELL
11280.02

BUY
12531.31

BUY
11998.60

NASDAQ
Composite

Holiday

SELL
2432.26

SELL
2458.36

SELL
2480.81

SELL
2486.09

BUY
2817.99

BUY
2714.35

Value Line
Index

Holiday

SELL
.2585.33

SELL
.2610.95

SELL
2632.85

SELL
2638.78

BUY
3027.95

BUY
2920.43

Note: Stop levels, a function of the extant trend, are based on the trailing moving average price channels for the Highs or the Lows of an index. Whether or not a specific index is suggesting a "Buy" or Sell" is determined by whether or not index prices are above or below the current channel Stop levels. Stop levels should only be used as an entry or exit guide and in conjunction with other market entry and exit strategies.

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