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Probably Not at the Top But Some Clouds Appear

It seems clear now that the market is engaged in a double zigzag corrective move. We are probably now in the last part of this counter trend rally, but looking at the move structure, it doesn't seem we are already at the top. The 1380-1390 area seems achievable:

Sigma Whole Market Index

Looking at the Sigma Trend Index, this indicator continues to improve, moving from'4' to '9'. Other indicators remain at '3' (neutral).

Sigma Table

But looking at the breadth index, we can notice the early sign of a negative divergence: the market (blue line) is close to new highs while the breadth index (red line) remains well below previous top.

We must monitor the evolution of the situation (on the breadth index) because a confirmed negative divergence should be interpreted as a warning signal that the top could have been reached.

Market Breadth

Conclusion:

We remain comfortable with both our short and medium term positions because we believe we are close to a major top in the market (short on medium term) but not there yet (long on short term).

For those of you interested in our intraday move, you can visit our site during the day: we post all our trades in real time. You can also subscribe to our twitter account (@SigmaTradingOsc), it is free and you are updated on our latest view/trades.

Current positions:

Medium term positions:
- short 2 SPX at 1336.99
- short 1 NDX at 2578.46

Short Term positions:
- long 1 SPX 1363.23
- 1/2 long CAC at 3208.07
- 1/2 long NDX at 2585.95

 

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