Bears Grab Control

After an initial upward thrust at the open the cash S&P500 reversed course and traded sharply lower, forming an “outside” price bar on the daily chart Tuesday. Thus the bear camp has successfully challenged and broken through the 1014.91 level which puts them firmly in control at this point. We ended the day just above the medium moving average (solid blue line on the chart).

If my roadmap is to hold (I.e. we get a new high on or after the equinox) I think we need to hold the 978 level as this is a key Level 2 Price Pulse level. Can the bullish camp hold this level? There are signs that it is possible; but only signs at this point. Most notable are the oscillators and today I present the RSI, Composite and TD REI (in that order from top to bottom) on the chart above the price bars.

I am watching these points:
1) The RSI is in a downtrend and below its level of August 17th while price is still above its August 17th level. Possible positive reversal indication.
2) The Composite index is below its level of August 17th while the RSI is not. Possible bullish divergence indication.
3) The REI was above .40 for six sessions from Aug. 24 to 31. This is mildly overbought and has preceded the current weakness. The oscillator is now below -.40 and is mildly oversold. A TD POQ buy signal would come today if we trade above 1025.21.
4) Fibonacci retracement of the most recent price swing (up from the August 17 low as defined by the swing chart). The market opened above the 38.2% level and then traded through it, the 50% and 61.8% retracement levels. This is often a sign of near-term price exhaustion.

The four points above are only indicators of a possible upside reversal. None of them have occurred yet. Until they do I remain short-term bearish. And keep in mind that Friday is the monthly jobs report.