The weekly and monthly indicator charts are what I think could be my most telling of when the turn will happen (and that may not be as soon as you think). Sentiment is building, insiders are selling, all of the shit is boiling to the surface, but what will it take to get the indicators on these two charts to go red? The market is climbing the wall of worry right now. The suckers are getting sucked in. The pump and dump is in full swing. Note - the divergences I am looking for in the below commentary are not necessary, but would be nice to see. I will be playing this fall as if it could be the big one, but I would not be surprised to see one last run at a higher high.
Let's look at the weekly first. Link here for better viewing.
The weeklys are not ready IMO. Sure they are peaking and overbought, but not one real divergence is set other than the MACD histogram. RSI broke a major trendline at the bottom after setting up a 5 month negative divergence. I was hoping that his last pop up would set the divergence for the fall, but nooooo they had to climb to new highs. MACD histogram is there, but again no divergence in the indicator or signal lines. My favorite turn indicator (a cross in S Sto) is happening, but the set up is not for a major move south given the indicators around it. There is no divergence in CCI, no ADX sell signal, even the TRIX is not in the game yet. The RSI setting a divergence and then crossing the trendline will be my key for P2 to end.
Now lets look at a monthly chart. Link here for better viewing.
I have been harping on the monthly RSI trendline for a while now. Will it turn here? It is right at it. Bullish and bearish signals are all over the place. There are a lot of similarities like at the last bottom in '03. The bull cross has occurred in F and S Sto and MACD. MACD his is positive at the moment. These can all whipsaw in an instant. Some odf the more bearish indicators can be seen in the declining volume, SPX approaching the 200ma, TRIX not close to going positive, ChiO is ballistic, SPXA50 is in the stratosphere, BPSPX in way up and the P/E ratio is totally unsustainable.
Right now IMO it looks eerily similar to the '03 bottom almost all the way down the chart. This means nothing though. I have seen overbought dailys sneak their way to the bottom without generating any huge sell offs, yet in this case I think the market gets a sizable pullback soon (SPX 945-924 target range). The weekly and monthly indicators are not ready for a big fall just yet. I'm really curious about what happens with RSI and the trendline and with price at the 200ma (not to mention the overbought dailys and the rising wedge and decreasing vol and the P/E levels). A good fall, but not the big one. Wait for the indicators to set proper divergences and violate trendlines on the weekly charts. The signals will be there and a massive impulsive move will define the top. Hang in there. It's coming. Play it like this is the big one, but keep one eye on the bulls and the possibility of further strength. I don't think the manipulators have thrown in the towel just yet.