The market is doing what we were waiting for (target zone for the bounce back: 1350-1360), but we closed our long on the CAC40 too early. The divergence between SPX and the CAC40 was so high that we doubted about our idea, and we closed our long on CAC40 at breakeven.

Unfortunately, the CAC40 surged few hours later and we missed important gains.

Looking at our indicators, we can notice that the Sigma Trend Index (STI) increased sharply today, moving from '19' to '47'. The Trend Level (TL) was four the 3rd consecutive day at 5 (highest level).

We consider that the market is (now) overbought, and any reversal sign must be interpreted as a warning signal for the current bounce back.

The Breadth Index remains well oriented, and there isn't any sign of reversal or divergence:

Looking at our Sigma Whole Market Index (aggregate of 16 US indexes), we can notice that the market is close to important resistance:

Conclusion:

We believe the top of the rebound is very close but we are not there yet.

In this context, we will close the short position we opened today at 1359.8 during Asian sessions in order to benefit from the expected pullback (wave 4/c).

We expect a last push to the upside around 1370. Then, things should turn very bad for the market (SPX ~= 1200).

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Have a nice day,