After yesterday's sell off it might seem that the RSI/Composite bearish divergence and the weekly chart analysis of "the downtrend being close to resuming" was reasonable. In fact, note that we are on the verge of not confirming the weekly break out (see the weekly post). This also seems to put the odds in favor of the bearish case.
And although I think the bearish position will be right over the coming weeks I am not convinced that the bottom will fall out here - if only because the daily REI is showing a strong up trend from the Beta bottom. But maybe this is just a reflection of typical delta pulse strength? Possible delta pulse strength means that a retest of the Beta pulse low may result in yet another bounce attempt. It will be critical to see if the Beta low is actually broken. If it is, then even if we get a bounce (even as far as the 1245-47 area), we can anticipate that lower lows are likely ahead of us.
Bottom Line: I think the bounce/consolidation from the August low is either running on fumes or over. A break of 1136.07 will convince me that the downtrend has resumed - even if another bounce up ensues. My mechanical allocation mix meter is at +50% but would drop to 25% on a break of that 1136.07 level.
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