MARKET SIMPLICITY: by Woody Dorsey:
- The 6/22 High was cogent, as expected. The Intermediate term profile is for further declines into the Fall. Focus on that Interim Profile
- The Bounces from Key Support @ 2045 failed. It is possible that Recoveries could result in temporary Ranges.
- Stocks may Recover into Mid-August before the next leg down. But, as I allowed: “Stocks could turn down again much sooner.” As always, “Maintain a flexible Trading Mind.”
MARKET ENERGY: Stocks began last week by being boring but that did not last. There are an extraordinary number and frequency of Timing Nodes over the next 2 months. This augurs for extreme Market Behavior. Buckle your seatbelts. Stocks may stay within ranges for the next few weeks into Mid-August.
MARKET TIMING: The 6/22 High was significant. There has been a potential trading target (or, Sell Zone): 8/14-21ish. I call this set up a “Kill Zone.” During the transition from a Bullish to Bearish market, “it is best not to become anchored on any particular dates.” (If you forced me to tread these dangerous waters, I would look for an uptrade from 8/5-7 into 8/14, 8/19 or 8/21 to set more aggressive shorts.) While all Timing profiles do have an eventual bearish context, Trends are a process and the best declines occur later on not necessarily right here.
MARKET “TELLS”:Global Equity Woes were discounted at the 7/8 Low. But, Greece and particularly China are not over. Economic Weakness and Earnings Misses may be the new Negative darlings.
SENTIMENT INTERPRETATION: The DORSEY Market Sentiment identified Key Support as being near 2040-2045: It has been. Bounces generated 92% and 90% Sentiment Readings. Stocks turned down again but have not generated any actionable extreme sentiment yet. The 2127-2136 area remains as Key Resistance.INTERMEDIATE TERM: The DORSEY Intermediate Market Sentiment has been in a “see-saw” of Extremes. Intermediate term sentiment was “High” again @ the price High on 7/20. There is clearly more room to the downside for further negative price behavior to push this Sentiment metric lower.
MARKET SUMMARY: U. S. Equities have been Topping. Overt Support near 2045ish was tested. Some “Reprieves remain possible into August.” The Interim Term Timing is Clear. This argues for Position rather than Trading strategies. Be positioned for the next- another Corrective extreme due well into September.
TECHNICAL VIEW by Gary Dean: The SPX has pretty much gone in a straight line down. Last week I was expecting some type of bounce because of the bullish divergences on the 15 minute charts-and that bounce was much shallower than I expected, before the selling started again. There still isn’t any meaningful bullish divergences on the 60 minute charts, but the bulls may TRY for a double bottom pattern on the short term charts.
If selling continues, then I would expect the gap to get filled at the 2056 line with an outside chance of testing the 2045 line again. If the bulls can find their footing and continue to push higher, a move up to the 2089-2106 zone would make sense. There is an early gap this morning at 2068. If the bulls fail to hold above that gap, that would be an short term clue that 2056/2045 may come into play before and meaningful bounce.
Resistance Levels-2089-2106 outsider 2117
Support Levels: 2056-2045 outside 2020
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