SPX keeps the bull trap scenario alive by not making a higher high before today’s downturn. That downturn only filled a gap so at face value it is nothing serious. Lose the January high (green dashed line) again and we would start talking more seriously about a correction.
Dow turned down a bit but is well above the 25,800 breakout point, which set the January gap as an upside objective. As with SPX, it’s technically fine as it stands now but lose 25,800 and it could be a different story.
NDX broke down from the channel to test the SMA 50 again and this is not a positive sign because it had already done that. Failing the channel a second time and the ugly MACD & RSI bring on a level of caution here. It’s still up trending and still bullish, but I do not like this situation. Prove me wrong NDX. Until then you don’t get my investment funds. What’s more, a loss of 7400 (last week’s low) would open up further bearish potentials.
This market has whipsawed every which way from Sunday. Last week I was compelled to bring the alternate view of SPX to 3000+ forward. But the above daily charts tell me that at the very least, there is still a potential for the first half of September to have been a bull trap.
Despite this I am not in a hurry to establish short positions. That is because a real correction – if applicable – would provide lots of downside potential. I’d rather manage through cash until the market either pivots or reestablishes its upward course.