All numbers refer to SPX
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A quick Buy Signal with the early October bounce from 3585 is met with warnings of over-exuberance and subsequently fails with a rapid decline back towards the low, triggering another Sell Signal below 3711.
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Bearish and dangerous conditions continue with a new T structure collapsing as the market looks desperately for support at or near the previous low.
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The T volume oscillator 1 is again collapsing with price looking for support and continuing to indicate a distinct lack of buying power since the mid August high.
The market is looking for the next low from which to stage its next advance. This may be in the process of happening with the important 3600 area being challenged and tested. We should continue to expect rapid movement in either direction and selling into strength as the market looks to stabilize whilst making a decision on future longer term direction.
We are looking for price to move up (and hold) above the previous price high and preferably close at or near the high of the day, and for the T volume oscillator to move upwards through the declining cash build up line 2 line to indicate the prescence of a new T structure.
1 The T volume oscillator is an indication of Buying Power within the market as a whole
2 The cash build-up line is a declining line drawn above a series of lower highs made in the oscillator.
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The weekly chart shows last week's collapse back towards the low of the previous week. Bearish action continues with the market attempting to place and hold a low at the breakout area of November 2020. Failure here would suggest a re-test of the September / October 2020 lows in the 3209-96 area.
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The monthly chart show the ongoing collapse of the Mega T structure (and its extension higher into late 2021) as price comes to terms with the over-exuburance of 2020 and 2021 and attempts to find support. The continued decline suggests further weakness for now and we should therefore expect ongoing volatility within the context of a long term bearish market.
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2022 continues with price dropping sharply from the top of a range that has become increasingly expansive since the move above 2500. With price again below the extremely volatile range from 4100-4600 we can only assume that this expansive price action will continue - in both directions - and that the important 2020 highs around 3385 and 3500 may still become the target. This is a Brave New World and we should trade accordingly.
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Regardless of whether the market can move higher or whether significant lows are ahead of us, the simplicity of the proprietary price based S/T Signalling System will continue to keep us on the correct side of the market, currently indicating a Sell Signal since 06 October below 3711.
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If you would like to learn more about the S/T Signalling System , and using T Theory in your trading, please get in touch.
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Disclaimer: This is the diary of a personal trading system, its methodology and the signals that it is producing. You are welcome to follow along but please understand that the information presented here is for educational purposes only. No recommendations are being made to buy, or sell stocks, options or futures contracts. Please consult your own financial advisor before making any investment decisions.