Looking for lows on this stock market whoosh is still a bit premature as early gains have faded in Europe and the U.S.
Market breadth went from 5/1 positive in early action… to marginally negative.
That said, it’s still encouraging that stock market breadth went from -8/1 Wednesday to -3/1 yesterday and now today (Friday) could be flattish even on decline.
Volume still needs to show more signs of capitulatory action in my view. Would like to see TRIN readings >2, or 2.5, similar to what was seen in Feb and April (they were over 3 on those declines).
Also the Put/call on equities is still not high enough to claim REAL FEAR.  And though we’ve seen very low TICK readings in the last 24 hours and the percentage of stocks above 10, 50 day moving averages have been very low, this doesn’t always signal to buy right away.
Note the WEEKLY chart is showing a negative momentum divergence and rolling over.
For now… Intermed.term trends are intact from 2016 and momentum has gotten to the most oversold of the year on DAILY charts.
THE BOTTOM LINE-  It’s still right to be defensive into early next week while expecting minor new lows. Given the breadth improvement, a pullback to new lows should be a buying opportunity.
S&P 500 Hourly Chart
UNTIL/UNLESS 2765 is exceeded, its right to expect movement back to new lows early next week.
S&P 500 Daily Chart
Daily trend break. Momentum is negative and oversold, yet structurally we’ll need to see more selling/fear to think lows are at hand.  Currently on DEMARK 7 count (of 9). Need new lows Monday or Tuesday to confirm a buy setup.
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Author has positions in mentioned securities at the time of publication. Any opinions expressed herein are solely those of the author, and do not in any way represent the views or opinions of any other person or entity.
