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Pullback Maybe Not Over

We had to change our view on the market during the session because the market was unable to break the 1326 level.

This level represents 50% retracement of the down move from Monday. So, there is a lot of chance that the consolidation from the up move from 1266 to 1349 is probably not over (yet).

We could go lower, in order to retest 1305 or maybe 1295 before going higher.

On top of that, it is important to notice that there is a negative divergence between price and RSI:

SPX

When we understood that the pullback was probably not over, we decided to cut half of our long position at 1324.28 (16.51 pts gain). Then we placed a stop order at 1319. It was executed later in the day at 1318.81 (11.04 pts gain).

For those of you willing to track our intraday move, you can visit our site during the day (we post all our transactions in real time) our subscribe to our Twitter account (free) in order to get real time update of our move.

Looking at our indicators, we can notice that the Sigma Trend Index (STI) declined to '0'. This is the 6th day that the STI moves in a tight range around zero. This means the market is trendless (for now).

In this context, we need to be careful.

Sigma Table

The Breadth index is already in negative territory(red line):

Market Breadth

Conclusion:

Even if we believe the market should go to 1350 - 1360 in the near future, there are some contradictions in our scenario (unable to break 1326, STI at '0' and breadth index in negative).

In this context, we consider that we don't have an attractive risk/return now, and we prefer to stay on the sideline, waiting for a better opportunity.

Current position: no position

Have a nice day,

 

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