The Strong Spike Bounce that triggered on Monday vastly exceeded its target, but the price rally was not accompanied by a rise of FGIC.
The bars on the chart are colored red when FGIC is -8 or lower (Extreme Fear) and green when FGIC is +8 or higher (Extreme Greed). [ Please follow these links: original and update explanations how FGIC works. ]
FGIC remained flat all week, then ticked down on Friday. In the past this has frequently been a signal that the lows of the latest Spike Bounce (marked with a vertical S line) will be revisited. The price is now facing powerful resistances formed by the September highs that extend for a hundred points up to the 4620 area.
On the other hand, the S&P500 ended the week forming a 1HL setup and a V1 trigger that seems to be particularly powerful as Friday’s bar low is supported by the -1 ATR, the 1.5 ATR of the lows and the 200 SMA, which all cross at the same level. If this setup will work it is mandatory that next week the market sentiment, as expressed by the FGIC, will follow the rally.
(This article has been posted on SpikeTrade. Follow FGIC updates on www.spiketrade.com)