Two days ago we wrote:

"...The market is so strong we don't believe in the double top scenario at this stage. So, we believe an extansion to 1.618x wave one is possible. => it remains 0.8% upside in this scenario. This would imply a target around 1818 for the SPX and 3449 for the NDX...."

On Wednesday, the NDX reached our target but the SPX didn't. Nevertheless, the "reversal" we had in the last hour of trading is rather interesting. If we get some follow up of this reversal in the next two sessions, a ST top will be confirmed. 

It is also interesting to notice that in previous uplegs, when we got a breakout of the green downtrends, the market didn't retest those trendlines. In the last upleg, the market retested this resistance. Is it the sign the market is weakening, we will get the answer in coming days.

The negative divergence between the Sigma Whole Market Index and the Sigma Smart Money Index is still in place.

There is no change in our indicators.

Short Term Trading Book:

- SPX: 1 short at 1792.26 (stop @ 1827, 3pts above the ST model to take into account bid/ask spread)

- NDX: 1 short at 3361.01 (stop @ 3475, 5pts above the ST model to take into account bid/ask spread)

- CAC: 1 short at 4272.14 (stop @ 4423, 5pts above the ST model to take into account bid/ask spread)

- DAX:  1 short at 9193.36 (stop @ 9379, 10pts above the ST model to take into account bid/ask spread)

- EStoxx: 1 short at 3027.17 (stop @ 3105, 5pts above the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

When we look at the chart of the Sigma Whole Market Index, we can easily identify a 5 waves pattern in current up leg (pink lines). For the time being, the 5th wave is still below the top of the 3rd wave and current length is 32pts for the 1st wave and 31pts for the 5th wave.

The market is so strong we don't believe in the double top scenario at this stage. So, we believe an extansion to 1.618x wave one is possible. => it remains 0.8% upside in this scenario. This would imply a target around 1818 for the SPX and 3449 for the NDX.

The Sigma trend Index rose to 27, other indicators are neutral (at '3'):

Short Term Trading Book:

- SPX: 1 short at 1792.26 (stop @ 1827, 3pts above the ST model to take into account bid/ask spread)

- NDX: 1 short at 3361.01 (stop @ 3475, 5pts above the ST model to take into account bid/ask spread)

- CAC: 1 short at 4272.14 (stop @ 4423, 5pts above the ST model to take into account bid/ask spread)

- DAX:  1 short at 9193.36 (stop @ 9379, 10pts above the ST model to take into account bid/ask spread)

- EStoxx: 1 short at 3027.17 (stop @ 3105, 5pts above the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

The market came under further pressure on Wednesday. On a pure Elliott Wave basis, there is some overlap (but very limited) between mini-4 and mini-1 => the upleg should be over. Nevertheless, it would be smart to wait for a close below the pink horizontal line in order to confirm the reversal.

The Sigma trend Index (STI) dropped in negative territory, telling us market is in danger.

The ST model computed new stop levels on some positions:

Short Term Trading Book:

- SPX: 1 short at 1792.26 (stop @ 1827, 3pts above the ST model to take into account bid/ask spread)

- NDX: 1 short at 3361.01 (stop @ 3475, 5pts above the ST model to take into account bid/ask spread)

- CAC: 1 short at 4272.14 (stop @ 4443, 5pts above the ST model to take into account bid/ask spread)

- DAX:  1 short at 9193.36 (stop @ 9425, 10pts above the ST model to take into account bid/ask spread)

- EStoxx: 1 short at 3027.17 (stop @ 3116, 5pts above the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

When we look at the wave structure of current advance, it seems the move is  not completed at this time. It seems we are in a 4th wave. So, we need one more 'mini-rally' (5th wave) then a ST top should be printed before the end of the week and we should enter in a correction cycle.

When we look at our indicators, the ST model generated a fresh sell signal (for more details on our signals, have a look at our methodology).

According to our model, we opened 2 new short positions on both the SPX and the DAX (because they had been closed):

- we sold 1 SPX at 1792.26

- we sold 1 DAX at 9193.36

The ST model updated all stop levels (because a fresh signals has been generated):

Short Term Trading Book:

- SPX: 1 short at 1792.26 (stop @ 1839, 3pts above the ST model to take into account bid/ask spread)

- NDX: 1 short at 3361.01 (stop @ 3496, 5pts above the ST model to take into account bid/ask spread)

- CAC: 1 short at 4272.14 (stop @ 4520, 5pts above the ST model to take into account bid/ask spread)

- DAX:  1 short at 9193.36 (stop @ 9425, 10pts above the ST model to take into account bid/ask spread)

- EStoxx: 1 short at 3027.17 (stop @ 3154, 5pts above the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.

The market continues to rally but current upleg is already in its 26th session. When we look at recent uplegs, a rally of 26 sessions looks rather mature. So, we could get a pullback at anytime.

When we look at our indicators, we can notice the Sigma Trend Index (STI) is well above the key '34' level. So, we will get a fresh sell signal if the Swing or the Power Level drop at (or below) '2' in the next 3 sessions. (Have a look at our methodology for more details on our buy and sell signals).

It is interesting to notice that recent highs haven't been validated by the Sigma Smart Money Index. The divergence is still in place.

Short Term Trading Book:

- SPX:  no more position

- NDX: 1 short at 3361.01 (stop @ 3441, 5pts above the ST model to take into account bid/ask spread)

- CAC: 1 short at 4272.14 (stop @ 4372, 5pts above the ST model to take into account bid/ask spread)

- DAX:  no more position

- EStoxx: 1 short at 3027.17 (stop @ 3108, 5pts above the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- No more medium term position at this stage.