S&P Approaching Inflection Point?

BarroMetrics Views: S&P Approaching Inflection Point?

My cycle work suggests that July 19 +/- 2 trading days will be a cycle high. Of course, sometimes, my cycles highs and lows come and go with barely a whiff of a market extreme. Still, the cycles work often enough for me to sit up and take notice, especially if the price action starts to confirm. We that in mind, let’s turn the current price action in the S&P.

FIGURE 1 is the S&P cash. My ideal scenario working scenario was for a rejection above 1378, followed by a bearish conviction bar down.Alternative scenarios would be:

  • Bearish: A failure to reach 1378, followed by a bearish conviction bar below the low of yesterday (Tuesday July 18).
  • Bullish: A bullish conviction bar above 1378.

FIGURE 2 shows the Market Delta Chart (end of day) for the E-mini Futures (ES), nearest futures month. We see new highs on selling control. This is normally bearish. Going to Figure 3 where the ES trading day is split into 5 segments. The key is the last 3-periods where the buyers clearly run out of steam. This lack of demand does not augur well for the bulls. However the Market Delta VBI      FIGURE 4) does hold out some hope for the up move: it is showing confirmation of the upside momentum. Ideally for the bears we’d see a bearish divergence (higher price highs, lower VBI highs).

So what to do?

  1. Looking for a continuation up to the 1378 level – possibly into early Friday, followed by a selling rejection extreme and down close. This provides a sell setup and trigger. Stops above 1378; Or
  2. Sell the bearish conviction close below 1345 (July 17 low; stops above 1378); OR
  3. Buy a bullish conviction close above 1378; stops below 1345.

(All prices basis cash).

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FIGURE 1 S&P Cash Normalised Volume

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FIGURE 2 Market Delta Footprint End of Day

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FIGURE 3 Market Delta Footprint Split

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FIGURE 4 Market Delta VBI

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