Short-term warnings starting to crop up; Could be important into FOMC Array ( [cookie] => 13f6b7-1adaf2-942992-c9ad26-d4fdae [current_usage] => 2 [max_usage] => 2 [current_usage_crypto] => 2 [max_usage_crypto] => 2 [lock] => 1 [message] => [error] => [active_member] => 0 [subscriber] => 0 [role] => [visitor_id] => 576208 [user_id] => [reason] => [method] => ) 1 and can accesss
Near-term and intermediate-term technical trends remain bullish for US Equities, but momentum has now grown quite stretched heading into this week’s FOMC meeting. The combination of overbought conditions coupled with a near completion of DeMark-based exhaustion signals points to a possible stalling out post this week’s likely Fed rate cut (as shown by Fed Fund futures). While the intermediate-term trends and momentum remain bullish, I don’t find the near-term risk/reward appealing this week with SPX over 6600. Market breadth has declined in the short run (last two weeks), and I suspect that some minor consolidation could prove likely starting mid-week. Given how stretched SPX has become lately, I feel that any daily close under the 5-day rising moving average (SPX-6566) likely could coincide with 3-5 days of weakness. At present, DXY and Treasury yields remain downward sloping, precious and industrial metals remain in short-term uptrends, along with Cryptocurrencies. Global developed market and Emerging market Equities remain in bullish uptrends.
Overall, my short-term concerns have to do with the following:
- Near-term overbought conditions - 2-hour charts show RSI (Relative Strength Index) having reached levels which coincided with pullbacks this year on most occasions (8/13, 7/28, 5/16, 1/23, and 2/19) while daily RSI is now approaching 70.
- DeMark-related exhaustion is now close to completion on daily charts along with 240-minute charts (and might be close to signaling exhaustion on 60, 120-minute charts into Wednesday on a bit more strength). These are normally the timeframes I utilize personally to identify a possible confluence for market peaks and troughs of a short-term nature. However, given that weekly DeMark TD Sequential and/or TD Combo signals on weekly charts likely won’t show TD Countdown signals in unison (both $SPX and $QQQ) for another 2-4 weeks, I’m skeptical that any mild setback this week will prove all that important.
- Market breadth has waned in the last two weeks and generally has been lower since July of this year. While a pick-up in breadth did occur from early August into late August, that has since waned in the last week. (Note, despite today’s +0.47% $SPX gain, seven out of 11 sectors were lower on the day (based on the 11 Equal-weighted ETFs that make up $SPX.)
- SPX rally from 9/2 has nearly exactly equaled the rally which began around this same time in August (8/1-8/15). This recent leg higher from 9/2 would be equal in points gained to the rally from 8/1 at around 6630 in $SPX.


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