You can see from this morning’s bulletins that we are having fun with the website programming.
As the market has been one time framing lower now for six RTH sessions, there is a downtrend in place and that downtrend line marks your shift to a bullish case. The line is dynamic so mark it on your charts. I would use 4460 on the December contract as the line right now – but it changes as price moves.
Another good proxy for a bullish reversal is to look for the price to come up through the 21-EMA on the hourly chart and successfully retest the line to make sure it will hold.
On the bear side, the sellers are working to break 4434.50 which continues their rare moment in the sun.
Treasuries (as measured by the TLT) seem to be breaking up out of their symmetrical triangle – portending lower rates. So the pressure may be off the Fed as far as tapering, but the greater concern is why rates are falling. Is it a flight to quality? Is it evidence that the economy is slowing? Is it a combination of both?
Fear seems too elevated to bring us a huge selloff, so I am still of the mind that this is part of the 80-day cycle trough developing. The precise due date for the low is the 22nd.
The cycle lows rarely follow the calendar as closely as we do but this corrective phase should be ending within a day or two of that target. The next big wave down is the 20-week cycle due in late November. That is where it promises to get more interesting.
Stay tuned,
A.F. Thornton