Follow-up to #5. On the surface this looks like a normal dip inside a bull market, with Q3 GDP at 3.4% and core PCE at 3.1% keeping a December hike on the table. On the weekly chart SPX has now closed two weeks in a row under the 7,641.70 weekly mode level (7,623.68 on 10/23 and 7,580.07 on 10/30). The weekly has no clear signal yet, it’s just chop for now.

The August weekly signal expired as a failure. The 9/25 weekly signal is still technically alive above 7,483.79 with 8,105.87 as the target, and I’d call that a low chance.

The daily is where the danger is. The second daily downtrend expired after some mean reversion took place, but was followed by a third downtrend signal. Downside targets are 7509 and 7320. The monthly looks dangerous too, now that its uptrend expired and the oil-lag effect is starting to show up.

The strict invalidation for the daily downtrend is 7,751.53, the stop of the most recent downtrend (the red box). Turning bullish takes more than that though: the daily needs to base for a few days, 5 bars with higher lows, and then shoot up after being accumulated. Until then I stay bearish. The risk for shorts is a catalyst: the Iran war ending and/or the midterms could make this reverse quickly.

I’ll update as we go.

Cheers,
Ivan Labrie.