The cash S&P500 reached the Fibonacci cluster described in yesterday's post and then turned down. So there WAS a reaction at that area. The question now becomes "How important is that reaction? Is it just minor, will the uptrend continue through that point now? Or was it a significant reaction that will end up being an important high?"
To help answer that question I watch the RSI for an indicator of the market trend. In a downtrend the market will break the 38 level as it did while falling into the August low. When the downtrend is over the RSI will then move clearly above the 63-67 area. Movements that can not exceed this area are only counter-trend rallies in the continuing downtrend.
Interestingly the RSI is now at the decision point. New uptrend or Bear market rally? Let's watch and see.
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