I will start off with the short term S&P chart. (60 min/6 weeks) I have a direction laid out for where we might head short term, BUT I am hesisitant at all to even post it, because I'm not very confident in it. The main reasons I have for a bounce dead ahead is the stochs, MACD and RSI are all oversold on the 60 min. chart. In addition, the stochs are oversold on the daily as well, with the RSI and MACD approaching oversold, but they have some room lower. The problem with that is Oversold during violent sell offs, just become more and more oversold. So take this short term direction prediction with a heavy grain of salt;
O.k.. that's pretty much all there is for the bull case at the moment. The S&P is still over the 100dma which is important. But it's stuck between the 50 and 100 right now. Below the 100, things get hairy fast. We may have that oversold bounce, but i'm really only 50/50 on it here.
Moving on.
XLF... ugly ugly ugly ugly.. for those that don't know. XLF is the tracking ETF for the financial stocks.
This chart speaks for itself;
Let me just say, with this kind of action in the financials, those with more access to information than most of us have know more than we do. We can guess, as I certainly have lately, but the market is telling us somethings wrong. Don't forget David Tepper abandoned his huge positions in the financials recently. Tepper is a cocky dude, so to admit he was wrong, he probably knows something.
Moving on..
IWM is ugly ugly ugly... just like XLF, it is below all moving averages. So we have both IWM and XLF that could potentially get a death cross going forward here. Ouch.
The Russel only looks uglier than the XLF because it had run up so far. The Russel looks like a bubble set to collapse. It could maybe bounce off the bottom of that megaphone, but man.. that's an old megaphone.
Now back to the S&P on the long term. As mentioned, we are stuck between the 50 and 100dma's. Like I said, we are oversold, so most of the time, i'm going to say we have a bounce coming and it sort of fits into a short term EW count. But, we have the financials and small caps that are closed under ALL moving averages. That is bearish as all get out. Financials and small companies are 2 of the most important pieces to the economic puzzle and they are both looking like potential collapse.
The DOW and S&P obviously look more healthy than XLF or the Russel. But I think that is nothing more than the multi-nationals still trying to hold in the DOW, and consumer staples and other defensive areas catching a bid while some of our leaders from the rally are rolling over and dying.
Here's the long term chart showing different area's of support down to about 1239. Below that, we could go cliff diving in a hurry.
I will say this much.. the bears case is getting stronger and stronger and if the XLF and IWM don't get back above some moving averages, this market is doomed.
GL
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