The US markets remain comfortably under the recent sp'1709 high, and there looks to be very reasonable downside into September. Prime target zone within the next 3-4 weeks is 1600/1575, which will probably equate to VIX briefly in the low 20s.
sp'weekly7 - near term overview
sp'weekly5 - fib levels
So, a weak closing hour for equities, and that made for a 13pt swing from the earlier high of sp'1669.
Yet, the weekly charts are offering a lot more for the bears. We now have the fourth consecutive blue candle on the 'rainbow' chart. Based upon many of the multi-week down cycles in the past few years, the current four candle setup is HIGHLY suggestive of much lower levels across the next few weeks.
Certainly, I can envision sp'1620/00s next week - even with Monday closed.
In terms of Fib' levels, the 1560s are particularly attractive, and there are a fair few other MAs and channel/trend support around that level.
Bigger picture...still tricky
I will again highlight the 'best bear case'...below...
sp'weekly'9c - a hit of the lower trend?
Under my rules, I need to see a hit of the lower weekly bollinger (currently 1564..and rising), otherwise I'll be VERY concerned that the next bounce will be able to take out the 1709 high. Any daily closes >1709, and this scenario would need to get trashed.
There is a small array of econ-data for Tuesday, case-shiller, consumer confidence, and Richmond Fed. If those are at least 'reasonable' the market will have its excuse to rally not least helped with....
*very significant QE of $5bn for Tuesday. bears..beware!
I remain on the sidelines (it has only been two weeks, but seems like years), and am seeking an index re-short in the sp'1680s. Considering there is further QE on Wednesday, I'm expecting to wait until then.
Goodnight from London