It was another remarkable day in the cash SP500 market; if only because all 500 stocks in that index were down on the day. All of them. And now we watch for the usual scenario to develop: bounce and retest.
Yesterday marked bar #9 of a daily buy setup. This is the indication that tells us we should watch for a bounce. The indicators I follow then say to watch for a retest. As an example, the RSI (top pane) is now at it's lowest level since September 2001. The composite index is showing its lowest value in at least 28 years! Extreme indicator readings most often indicate that when the market finally finds its footing and bounces, it will then come back and retest the low.
On the expected bounce (which should come within five bars of bar #9) we can use fibonacci relationships and moving averages to help set targets as well as TD Trend Factor. This gives me two areas to watch which are marked on the chart: around 1180 and then (and perhaps more importantly) 1245. At Monday's close the hourly chart had an unqualified break of sequential buy risk level, so we may try to start a bounce from here
Bottom Line: The allocation mix meter is at +25%. Waiting for the bounce.
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