Sunday, August 9, 2015

Another Selling Opportunity Is Coming Up

SGS Market Timer Status:  SHORT 
SHORT as of close of 7/24/2015

RTS Current Portfolio (2015)
Updated for recent trades
The sell off past week was ugly and damaging to the bull case.  After dropping around 40 points for the week, SPX finally found support at its 200 D-SMA on Friday.  Despite only a 0.25% intraday penetration of 200 D-MA, there was no evidence of any dip buying. That is not a good sign for bulls.  Nevertheless, SPX managed to close about 0.25% above its 200 D-SMA, mostly likely due to short term short covering.

All three leading indices (DJI, DJT and RUT) are now trading below their 200 D-SMA.  NAZ and SPX are both trading below their 50 D-SMA's.  Chances are excellent that SPX and NAZ would follow the leaders and crash through their 200 D-SMA soon, probably within the next 5 to 10 trading days.  For SPX, a daily close below its 200 D-SMA would signal a high likelihood of testing of its PUL's (PUL-2 and PUL-1) around 2040 and 2005.  Those two PUL's (thick black) have shouldered the uptrend since October of 2011. A solid close below those lines (a close below SPX 2000) would cause a major sell off and very likely test of PUL-0 around SPX 1750.

Per my plan, I did my 2nd short sell immediately after a daily close below 100 D-SMA (2095) on Wednesday.  Going forward, short term indices are oversold and chances are good that SPX rallies on Monday and possibly Tuesday to back test the immediate resistance zone between 2090 and 2095.  My plan is to do my 3rd short sell as SPX back tests that resistance zone.  After the back test, should SPX sells off and closes below its TUL (thick pink), I would do my fourth and final short sell.

SPX: S&P 500 Index    D-SMA: Daily - Simple Moving Average
DJI: Dow Jones Industrial Index    D-EMA: Daily - Exponential Moving Average
DJT: Dow Jones Transportation Index    PDL: Primary Downtrend Line
NAZ: NASDAQ Composite Index    PUL: Primary Uptrend Line
RUT: Russell 2000 Index    ADL: Active Downtrend Line
OEX: S&P 100 Index    AUL: Active Uptrend Line
NDX: Nasdaq 100 Index    DTL: Dynamic Trend Line   
TUL: Tentative Uptrend Line   TDL: Tentative Downtrend Line