GREEN SHOOTS:
Hammers all over the place
The notoriously fickle VIX diverges (favoring bull SPY)
High CPCE is “near a SPY bottom” level (last time there was mid Aug, 2017)
“Fear & Greed Index” is at extreme fear @ 10 (it was 8 on Thursday; contrarians are taking note)
BofA thinks the FED will step in near here. "Markets stop panicking the moment central banks start panicking."
[zh: that's the $6.4 trillion question: at what SPX level would central banks step in? … not yet…]
All new FED Chairs get tested:
https://www.zerohedge.com/sites/default ... k=f8ikAM07
Everyone (yes, everyone) is watching the SPY 200sma. If it can hold convincingly … yippee SPY.
If it breaks down convincingly there should be plenty more selling, as folks will think that this correction could turn into a crash
PROBLEMS:
Green shoots can evaporate in an instant
Friday’s lower lows should be tested
IWM broke 200sma Friday, and junk HYG broke days ago
IWM Friday went down more than 3.5 standard deviations below its 50ma, quite extreme, then it closed above that. (btw: It was the only major index anywhere near that 3.5 std-dev marker)
Friday’s new 52-week lows = 356 (they keep increasing… not good…)
LONG TERM:
The breadth (participation) index $BPSPX Bullish Percent, says SPX is bull above 60% BP, pullback below 60% BP, and bear below 50% BP.
It also says there is no rush to re-enter long IN THE LONG TERM PORTFOLIO. Wait until the Bullish Percent recovers to above 50-60% before going long again.
So what, you' ll be a bit late...
Also note that the last LONG-TERM signal was bull in Feb 2016 (green arrow), and it remained bull for almost 2 years until the bear (red arrow) now.
The Fibonacci drawn from the 2-year low to the recent high, shows that a 38.2% retracement (considered a minimum for a decent correction) would hit at
roughly 244 SPY. If it corrects to better than 38.2% (higher than 244 SPY)… then it’s bullish SPY. If the correction goes deeper than that, then we’re headed for 50% or worse.
Weekly chart