MARKET POINTS: by Woody Dorsey
I repeat: “Do not Believe in this market.” The Good News, New Highs and High Sentiment were typical of a Golden Halo (GH) formation. Probabilities favor that a High has already been registered but these sorts of rollovers can appear to start in slow motion. This weeks’ rally looks like a “shadow high” or secondary high just like there are often “shadow lows.” Markets are a process.
- Near Term Diagnosis: Sentiment is 89% Bullish today. After last weeks’ sentiment torque from 93% to 2%, I suggested “a pop could easily occur.” Thus this bounce was allowed but Dates are for members only-join here. The generic timing profile remains for, “Tactical negativity in Dates are for members only-join here.” If I had to guess for you very short term traders, this recovery sets up another sell near Dates are for members only-join here. Keep in mind that the market has likely embarked on a multi month correction.
- Interim Term Diagnosis: A Golden Halo (GH) has been formed and a corrective process is beginning.
- Long Term Diagnosis: The TrumpTop will result in a “very meaningful decline.” After all, we have not really had a good correction in some time.
MARKET TIMING: I advised that an “Interim Top has been signaled.” The timing profile remains for, “Tactical negativity in Dates are for members only-join here.” and for a near term sell near Dates are for members only-join here. The remainder of this pre-holiday week may not be that definitive.
SENTIMENT INTERPRETATION: The Dorsey Tactical Market Sentiment registered a 93% bullish on 5/16. That behavior likely signaled that the interim GH (Golden Halo) High has been registered. The 2% bullish registered on 5/18 did signal a low and allowed for a bounce. The DORSEY Intermediate Market Sentiment is also beginning to turn down. The levels and the shape are in alignment with the potential downside profiles into Dates are for members only-join here.
MARKET SUMMARY: Stocks have registered a Golden Halo (GH) topping formation. I suggested 2 weeks ago: “We will all look back on these “Golden Days” in a few months and wonder why everyone was so friendly!” We will see. A secondary or shadow trading high was due Dates are for members only-join here. Don’t be complacent.
TECHNICAL VIEW by Gary Dean: The range for the SPX is 2399 high and 2386 low. The bears need to push the SPX below 2386 to get the energy to drive the spx to the 2375/2365 support range. The bulls need to push the SPX above the 2399 to give themselves a try at 2405-2409.
- Short Term Support- Below 2386 is earliest clue 2375/2365 may come into play
- Resistance Levels: 2399-2405-2409
The bearish divergences-wave structure and GH set up are all in line for weakness once this bounce ends. Even if for some reason the bulls use the upcoming low volume to take the SPX to new highs-the wave pattern is just setting up for the larger drop. But this bounce can still just be part of wave (2) or B and wave (3) or C down is pending. As Woody has said-this is NOT the time to be complacent and building short positions with any strength at resistance is the preferred trade right now. From a technical view-there should be more points to the downside than the upside from here-no matter where this bounce ends.
The summation index continues to show some massive divergences-and that is something you don’t want to get complacent if long-when this appears.
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