We don't like the kind of intraday triple top we have around 1324-1325.

We fear a sharp sell off if we can't move quickly above this resistance.

We set our SL at 1309.5.

We will short the market if we move below 1295

Yesterday was a very exciting day, and I think it gave us a lot of information:

You can notice on the Sigma Whole Market Index  (representing the aggregate of 16 US indexes) that yesterday's low was higher than previous low which was also above than previous low (small horizontal red lines) => the downtrend was in a total lack of momentum and was unable to push below previous lows.

You can also notice we had a reversal day: long vertical line with a small "body" located at the top of a long vertical line. Such reversal days are identified by green boxes on our chat.

Very interesting too, we were able, for the first time, to close above the downtrend line (dark blue line).

=> Our chart tells us that there is a HIGH probability for a rebound NOW.

Looking at sentiment data, we can also notice that the bull/Bear spread released today by AAII is very close to buy zone:

Looking at our models, we continue to notice that the situation is slightly improving, both the breadth index and the sigma trend index (STI) improved yesterday:

The sigma trend Index moved from -10 to -7, telling us the downtrend continues to weaken:

The Breadth Index (red line) improved too:

Conclusion:

When we detected that the market was unable to move below previous low, we decided to cut our 1/2 short position at 1318.62 (=< 18 pts gain).

At the end of the session, thanks to the important reversal day, confirmed buy our improving signal, we decided to open a FULL LONG position @ 1318.92

Current position: long @ 1318.92

Have a nice day,

SigmaTradingOscillator

Following Friday's and Monday's session, we were expecting a bounce back in the 1335-1345 area.

Nevertheless, with today's "reversal", we fear that the next downleg could already have started.

For sure our key indicators improved slightly today, but as long as they remain in negative territory, they are pointing to a downtrend => we are in a rebound, not in a trend reversal (for the time being).

In this context, we decided to short half a position @ 1318.62 due to the sharp intraday reversal.

We will short the second half @ 1338

Current position: 1/2 short @ 1318.62

Have a nice day,

SigmaTradingOscillator

As we wrote during the week-end, some divergences were in the market at Friday's close.

Those divergences were confirmed  by an important rally yesterday.

We can notice that our Sigma Whole Market Index had an important white candle yesterday. It looks like the market would like to retest the horizantal green line.

On top of that, our short term fear index moved (yesterday) from -34% to -1%, telling us there isn't anymore fear in the market.

Our Sigma Trend Index (STI) remains in negative territory, moving from -59 to -13. Nevertheless, with 6 consecutive sessions in oversold territory (six consecutive '1' for the Trend Level (TL)), we believe a short term bounce back could happen at anytime.

Our Swing Indicator (Swing) moved from 3 to 4 (on a scale from 1 to 5, with 3 = neutral), telling us that yesterday's move was bullish.

Conclusion:

Friday's session gave us a red flag (=> we reduced our short by half), yesterday's session gave us a green light for a short term rally.

In this context, we decided to cut the remaining part of our short position at market close => 1345.06 - 1314.92 = 30.14 (gain).

We are now neutral because our medium term indicator (STI and breadth index) remain in negative territory, telling us that this move is probably a short term bounce back rather than a trend reversal.

We are waiting for good entry point in order to open a new position.

Current position: neutral

Have a nice day,

SigmaTradingOscillator

We start to detect some capitulation signs: some indicators are close to panic level.

We need, now, to monitor any reversal day in order to cut our short position, and to play a short term bounce back.

The Breadth Index is around '-50', we are waiting for a sharp decline into panic area (around '-90').

With 38% of S&P500 stocks in panic mode (blue line), we are not far from capitulation.

Current position: short @ 1345.06

Have a nice day,

SigmaTradingOscillator