THE ONUS IS ON THE 'BULLS'!!! The market has sold off sharply since last Friday with the SPX now down 370 points from the highs! Where are the 'bulls' from three weeks ago who were questioning us about this still being a bear market?? Crickets.....
Anyway the SPX and QQQ have now been below their respective 50 day MA's for 2 consecutive days, furthermore the 50 MA has acted as resistance on intra day bounce attempts.
The onus is on the 'bulls' the intercept the football - they need to do so immediately!! Otherwise this sell off could get much uglier!
In the very short term we are monitoring a potential ending diagonal 5 waves (and of course the SPX still has an unfilled gap around 3925 as a last hope. There is some positive divergence on the MACD and RSI on the 30 and 60 min time frames. If the market can't bounce here, then this move is a wave 3 that we've been showing as an option that would result in lower prices, then a wave 4 bounce, then another move lower in 5 before finally getting a decent oversold bounce. Realize that if the market does rally from here it will result in a lower high and another shorting opportunity. Either way guys, lower prices are ultimately in store.
As far as the Systems: The KISS trend systems went to cash last Friday, and so they are in good shape. Currently we have some reversion to mean systems that are taking a bit of heat, the bear long and Strap for both SPY and ES. Should the market go lower before we see a decent bounce these systems will take more draw down. The systems need a bounce to exit. Unfortunately that's what happens with the systems sometimes, they have to go through draw down and multiple entries before the inevitable reversion to mean bounce occurs. If you wish to limit your exposure instead of following all the sub systems you could pick and chose. The bear long is my favored system over the Strap, and the bear long has 2 entries on both SPY and ES - should we get lower prices we may see a 3rd entry.