Stock Market Technical Analysis Blog
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In the market today we escaped the QE tapering bullet but learned it may very well be the last time causing a strong sell off into the bell.
Taking a look tonight at the Sentiment EMAs on the Daily chart of the S&P, we see where the smaller red ema was starting to down cross late Friday, but with the liberties taken on the opening of the S&P futures Sunday evening, the set up showed a bounce beginning on Monday. After today's sell off we can see that the red-green line bounce is in trouble.
Looking back on the past 6 months we see that the Sentiment EMA line bounces are what have been used to keep the market going higher. Note the early Jan, early March, and late April bounces. The next two days are critical, if the red line down crosses the green it signals the transition of stock market sentiment from Bullish to Bearish. If this happens, I am sure every obligatory bounce point will be utilized on the journey down and the 4 am manipulation will be heavy to try and slow the damage. Nonetheless, when the red is below the green line the path of least resistance is definitely downward.
If they come in at 4 am tomorrow and work their magic, it could delay the resolvement of this key line interaction for a couple of days.