Sunday, September 9, 2012

Crucial stage

The market is at a very important stage right now. I have been following a bearish count since last month on SPY. As predicted, the market has reached the top of the Ending Diagonal. This is a multi-week chart and visible to many. The market will either reverse here, as expected, or surprise to the upside cancelling this count altogether.

The weekly stochastics are overbought and if we turn down on Monday and remain down the next week, we will setup a negative divergence on the week. But just because the signals are showing overbought does not mean the market will sell off immediately. There may be some chop this week.

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