After Thursday's selloff, the market achieved a small pullback, retesting a key resistance. We believe this move could be a 4th of 1. Then we should have a lower low early next week followed by 3 to 5 days of consolidation. A sharp decline should start (3 wave) after this consolidation.
Looking at our indicators, we can notice that after a sharp decline on Thursday, the Sigma Trend Index 5STI) stabilized around the zero line (at '4' vs '2' on Thursday). The Swing, the Power Level (PL) and the Trend Level (TL) are in neutral territory at '3'.
The breadth Index is testing the zero line from negative zone:
Conclusion:
We have no reason to change our view and our position for the time being.
Have a nice week-end.
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Current position:
- short 1.5x std size SPX at 1336.48 (stop loss 1350)
- 1/2 short CAC40 at 3103.72 (stop loss 3140)
