Stock Market Aggressive Sell Signals

By: Anthony_Cherniawski

SPX appears to be testing the trendline of its Orthodox Broadening Top formation and is expected to make a small bounce. At this moment, I would call the status of its current position as an aggressive sell signal, while a drop beneath the trendline at 2041.00 would turn it to a confirmed sell.

The famous stock trader, Jesse Livermore once said, “Money is made by sitting, not trading.” In this case, a short position carried since our first sell signal in early November still has value, while attempting to trade the Triangle would have led to a series of frustrations, if not losses.

Meanwhile, the Dallas Fed Survey crashed to its June 2009 lows last month, further distancing equity prices from their fundamental values.

VIX is on a confirmed buy signal, having gapped above its mid-Cycle and 50-day Moving Average at 16.60.

The Hi-Lo Index is off its highs, but has yet to decline beneath its mid-Cycle support and 50-day Moving Average at -70.37.

TNX is threatening to break its lower Triangle trendline and mid-Cycle support at 21.97.

We may see these levels being broken later today, but trading is light and the markets may stall for the remainder of the day. One thing is certain. There is no incentive to “window dress” the year-end numbers, as the Yen Carry has weakened and even the FANGs have lost their appeal for ownership at year-end.

The winter storm has hit, but does not appear as threatening as earlier forecasts have implied. I’ll check back periodically to see what critical changes are underway.

Regards,

Tony

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