The Sigma Whole Market Index is unable to move above its 50d MA (red line). Looking at the chart, we wouldn't be surprised to get an acceleration to the downside (short term capitulation).

The Sigma trend Index remains deep in the red at '-41'. The Trend Level(TL) is at '1' (short term oversold) and the Swing is at '2' (mild negative impulse)

There is no change in our stops at this time:

Short Term Trading Book:

- SPX: 1 long at 1654.12 (stop @ 1608, 3pts below the ST model to take into account bid/ask spread)

- NDX: 1 long at 2868.65 (stop @ 2985, 5pts below the ST model to take into account bid/ask spread)

- CAC: 1 long at 3657.24 (stop @ 3943, 5pts below the ST model to take into account bid/ask spread)

- DAX: 1 long at 7817.14 (stop @ 8071, 10pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- SPX: 2 shorts at 1682.84 (stop @ 1724, 3pts above the MT model to take into account bid/ask spread)

The Sigma Whole Market Index continues to decline. Once again it seems the strong support is the lower band of the red uptrend channel. (~4% below current levels).

The Sigma Whole Market Index is testing its key 50d MA (red line). We can notice that in the past this MA acted as a very strong support for the uptrend. When the market was able to move below this MA (red box), we got an important correction.

The CAC is in danger, it closed below the lower end of its rising wedge. The key support to hold is the green horizontal support at 4072.

Our long position on the SPX was stopped at 1645.94 => we book 57.77pts (gains)

Short Term Trading Book:

- NDX: 1 long at 2868.65 (stop @ 2973, 5pts below the ST model to take into account bid/ask spread)

- CAC: 1 long at 3657.24 (stop @ 3831, 5pts below the ST model to take into account bid/ask spread)

- DAX: 1 long at 7817.14 (stop @ 7979, 10pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- SPX: 2 shorts at 1682.84 (stop @ 1724, 3pts above the MT model to take into account bid/ask spread)

Last week-end, we underlined that the divergence between the Sigma Trend Index (STI)(in red) and the Sigma Whole Market Index (in blue) was unsustainable.

Since the beginning of the week, we have been warning the market was at risk of an acceleration to the downside.

Yesterday, the market broke its ST uptrend by moving below its key (pink) horizontal support (lower low).

Now, it is difficult to see where this correction will end. So, we will follow our indicators.

Nevertheless, as the Sigma Trend Index is very low, we wouldn't be surprised to be see a bounce back on Friday or Monday (maybe for a retest of the pink horizontal support by the South).

Looking at the CAC, we can notice the index was able to remain within its rising wedge, but we got a serious warning on Thursday.

The ST model highlights highly oversold market on a short term basis. The Sigma Trend Index is below '-100' and both the Swing and the Power Level were at '1' on Thursday, telling us the decline was powerful and made a lot of damages..

The ST model uplifted, once again, its stops for the CAC and the Estoxx. Other levels are unchanged:

Short Term Trading Book:

- SPX: 1 long at 1588.17 (stop @ 1646, 3pts below the ST model to take into account bid/ask spread)

- NDX: 1 long at 2868.65 (stop @ 2973, 5pts below the ST model to take into account bid/ask spread)

- CAC: 1 long at 3657.24 (stop @ 3830, 5pts below the ST model to take into account bid/ask spread)

- DAX: 1 long at 7817.14 (stop @ 7979, 10pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- SPX: 2 shorts at 1682.84 (stop @ 1724, 3pts above the MT model to take into account bid/ask spread)

Tuesday was an interesting session. Even if the Sigma Whole Market Index was able to close in the green (up 0.2% on the day), it is important to notice that the Sigma Trend Index (STI) slid once again (from '-3' to '-4'). This situation underlines (once again) an uptrend in danger.

Due to the high level of dispersion in the market, the ST model moved in defensive mode: it sharply uplifted stops levels in order to secure nice returns in case of reversal.

Short Term Trading Book:

- SPX: 1 long at 1588.17 (stop @ 1646, 3pts below the ST model to take into account bid/ask spread)

- NDX: 1 long at 2868.65 (stop @ 2973, 5pts below the ST model to take into account bid/ask spread)

- CAC: 1 long at 3657.24 (stop @ 3816, 5pts below the ST model to take into account bid/ask spread)

- DAX: 1 long at 7817.14 (stop @ 7973, 10pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- SPX: 2 shorts at 1682.84 (stop @ 1724, 3pts above the MT model to take into account bid/ask spread)

Here is our in depth weekly update.

Medium Term View

When we look at the weekly chart of the Sigma Whole Market Index (aggregate of 16 US indexes), it seems there is no immediate danger to the uptrend: the market was able to breakout the red rising wedge to the upside and he is now in a new (green) rising wedge.

Nevertheless, when we look at our Mt model (MT model), we can notice our weekly PL (power level) came in at '2' this week (mild negative impulse).This is a warning signal.

On top of that, the weekly sell signal we got end of May is still valid because the stop hasn't been reached yet.

Short Term View

When we look at the Sigma Trend Index and the Sigma Whole Market Index on the same chart, we can clearly identify a negative divergence between the red and the blue line. This means that even if the market continues to rise (blue line), the internal dynamic is weakening.

Now, it becomes more dangerous because the Sigma Trend Index (red line) slid in negative territory. So, the market is in danger and it is important  the STI moves back in positive territory or we could get an acceleration to the downside.

When we look at the daily chart of the Sigma Whole Market Index, we can notice the market remains above the key (pink) horizontal support. We can consider the uptrend remains valid as long as this support holds on.

When we look at the chart of the CAC40, we can notice the index is in a very steep rising wedge. The CAC is also close to its top of May. So, we could be at risk of an important double top if we reverse from here.

Looking at the DAX, we can notice that recent rebound was much weaker than the one achieved by the CAC. It is also an important shift in the market because since 2009 the DAX has been the clear leader in Europe. So, when the leader starts to weaken, it is always a warning signal.

When we look at the chart of the Eurostoxx50, we can notice the situation is similar to the CAC one. So, we can conclude that financials are now outperforming industrials in Europe because CAC and Estoxx are heavy weighted in financials while DAX is heavily weighted in industrials.

Nevertheless, there is no big change in our indicators: both the Swing and the power level (PL) are neutral at '3':

The ST model uplifted its stops on both the CAC and the Estoxx. Other indexes are unchanged.

Short Term Trading Book:

- SPX: 1 long at 1588.17 (stop @ 1603, 3pts below the ST model to take into account bid/ask spread)

- NDX: 1 long at 2868.65 (stop @ 2863, 5pts below the ST model to take into account bid/ask spread)

- CAC: 1 long at 3657.24 (stop @ 3745, 5pts below the ST model to take into account bid/ask spread)

- DAX: 1 long at 7817.14 (stop @ 7856, 10pts below the ST model to take into account bid/ask spread)

Medium Term Trading Book:

- SPX: 2 shorts at 1682.84 (stop @ 1724, 3pts above the MT model to take into account bid/ask spread)