I lean to a positive bias in the S&P 500 form the morning low in an attempt to retest or make a minor new high prior to the Powell speech tomorrow at noon. Over 4132 should confirm that the low at 4095 will hold and result in at least a deep retrace up if not a new high on the swing. The other option is that the larger correction ended last week and we are now in the early stages of forming the first impulse down. I’m not fully confident in my short-term count but do think the overall theme is on track.
For context, I come back to this chart of S&P 500 components under the 20 day moving average. I think there is a good chance that we are entering a phase where the equity markets face a month or so of weakness.
Another chart I like to look at is this ETN of VIX. I’ve read some try to say VIX doesn’t matter anymore but I think that is a dangerous view. We can see VIX is threatening to bounce which again should be a headwind for bulls.
Also, take a look at the Dollar Index. We can see that it is coming back to life. I think this is also a negative for those looking for the equity market rally to continue.