2 weeks ago, on 29 March, I wrote about a Sell signal on the S&P500 futures ES charts with a Beware warning. Today, I am writing about the second warning that follows without a proper higher high, and a possible double top.
A quick look into the SPY charts at the end of last week shows a stall in the weekly chart, and a Sell signal on the daily chart (the second in two weeks without a decisive higher movement). Bearing in mind, this chart represents the last close on Thursday as it was a holiday on Good Friday last week.
Having said that, the Non-Farm Payrolls were released on Friday and it was a bit of a shocker... well, considering half of the expected results. This goes in line the idea that there was a mild winter and most of the spring jobs started earlier than usual, hence the better numbers earlier in the year.
In any case, a look at the ES charts show a similar Sell signal followed by a affirmative confirmation of a strong down day. The target for the coming week's move is to break the 1156 support, which may tip the scales to a downtrend.
A glimpse of the VIX chart also indicates a Buy signal earlier last week and also a bounce off the support at 15. There is also a MACD bullish divergence on the daily chart.
The same signals are clear with the VIX futures ETF, VXX.
A spike in the coming weeks is expected.
Another indicator of where equity markets tend to go is the USD (futures). Looking at the DX charts, the USD appears to be ready for a rally. Again, Buy signals were present and not stopped out. A good follow through in this and other related charts would paint a complete bearish scenario for the month of April.
Should April, one of the most, if not the most, bullish months of the year fizzle... then one wonders how the rest of the year would turn out. As we got into 2012, many were bearish, then now bullish due to improving economic indicators, and then again... what shall it be?
Only time will tell... and this Easter might just be the turning point.
Trade well and take care!
8 April 2012
Note: ALL material posted here is from my personal opinion, and my opinion may differ or change without notice. These do NOT constitute as solicitation, investment nor financial advice. By reading the materials presented here, Readers acknowledge the awareness that the materials are intended for educational purposes only. For investment(s) advice, related decisions and/or actions pertaining to investments, always consult your own qualified financial advisors, brokers, etc.
Charts are from TD Ameritrade Thinkorswim platform