The S&P formed a new V1 trigger on Friday after bouncing off support near the midpoint of Monday’s reaction bar. It closed above –1ATR, and Spike Bounce signal is back in a standby mode. The bull is selling its skin dearly.
Market sentiment, as tracked by the four timeframes of the CNN Fear/Greed index, provides positive signals as all timeframes are in their neutral or positive zones: a bullish signal that has to deal with vicious divergences that are in play on the longer-term chart.
The Composite Fear/Greed index, formed by the assembly of those 4 timeframes, also gives a moderately bullish signal by staying in the positive zone and finding support at the upper range of the neutral zone (+2) – a frequent congestion zone. It is worth noting that although the S&P has been declining in the last two weeks, FGIC has never moved back from its positive zone: compare the two periods marked with a green circle.
Last week’s conclusion remains valid: if the S&P is finding a base, its monthly new lows must quickly return below 500 and FGIC must maintain the positive zone.
(This article has been posted on SpikeTrade. Follow FGIC updates on www.spiketrade.com)