Top S&P 2015-03-09?

BarroMetrics Views: Top S&P 2015-03-09?

Has the S&P formed at least a 13-week swing top? Certainly the technical signs into Friday suggested it may have:

  • Sentiment
  • Price Action and Volume
  • Time

were all saying, a top was possible. In addition, my non-technical indicators, like the St Louis Fed AMB  (Figure 1), had generated sell signals.

Still, because the belief that is so prevalent – the belief that the Fed won’t allow a US stock market bear to form – I’d like to see confirmation before jumping on the sell wagon. In this case the confirmation is another bear conviction bar without an intervening bull conviction bar that closes below 2067 (basis cash) (Figure 2).

For new readers, here is a definition of  bear conviction bar:

  • a day with at least normal true range
  • a day with at least normal volume
  • an open no lower than in the top third of the true range
  • a close no higher than in the bottom third of the true range (better is a close in the bottom 25% of the true range).

Clearly Friday’s bar was an ideal bearish conviction bar. Today, we are likely to see a rally; if that comes about, I’d like to see the high capped at 2085 (basis cash), and then on Tuesday, I’d like to then see a bearish conviction bar closing below 2067.

The best confirmation will be to see the bearish bar today.

01-fred-amb.png

FIGURE 1 AMB

02-sp-daily.png

FIGURE 1 Daily S&P