BarroMetrics Views: S&P At the Cusp
The S&P is at the cusp. A superficial look at the price action last week may suggest strong downside continuation. But there is still the FOMC on Wednesday to consider. While it did say it would not react to market volatility, the statement is still to be tested.
On Wednesday, failure by the FED to confirm that it will raise rates next year e.g. by omitting keeping rates low ‘for a considerable time’ would confirm the market’s suspicion that the FED will come in to maintain the uptrend.
Is there any technical evidence that supports a possible bounce? There are two slivers. The first is seasonal strength is due this week. The 15-year chart suggests a long-drawn out affair where the low may come in Dec 15 to Dec 20; while the 30-year and 5-year suggest a bounce Mon (15) or Tues (16).
Figure 1 is the Daily Market Delta. It shows that as the ES has moved down, we have seen declining selling volume. This is a positive sign for the bulls.
Finally, what will trigger, for me, a sell signal? A daily bearish-conviction close below 1966 would raised a red flag. A weekly bearish-conviction close below 1977 would confirm. (Figure 2)
FIGURE 1 Market Delta
FIGURE 2 S&P Daily